i would not be shocked if we can't see our way through to a farm bill by september 30th of this year. that being said, there are 39 programs right now in the farm bill that do not have a baseline. and they will expire if congress does not provide funding. and i believe finney is one of those. so the cost is $2.8 billion over ten years for these 39 programs, one of them is organic -- there are just a bunch of different programs. so i think to flip your question over, i think what we need to do is to make sure that the chairman of the house and senate committees have something in place that if we are going to get an extension -- >> we are going to leave the last few minutes of this

discussion and take you live now to the brookings institution in washington, d.c., for a discussion about the future of the middle class. former vice president, joe biden, will be delivering the keynote address. he is scheduled to speak at 11:00 a.m. eastern this morning. and before his speech, we'll hear from economists, academics and former government officials about economic issues facing the middle class. >> we'll end the morning with a keynote address from former vice president joe biden. today also marks the announcement of a new brookings initiative on the future of the middle class. which will be led by my colleague, richard reaves, a senior fellow in the economic studies program, and draw expertise across institution, including from the work of our race, prosperity and inclusion initiative, led by camille bissett and amy lou. it was about this time last year that richard published "dream hoarders," a provocative book. it was very provocative, as evidenced by our discussions in the hallways, on the unequal

distribution of opportunity in america. i highly recommend the book, and as luck would have it, it will be available in paper book by the brookings press on june 12th, so look for it. as much as i love shamelessly plugging the work of my brookings colleagues, i am not here to exclusively do so. i am going to plug one other thing, i encourage you to check out the "new york times" is interactives on rod chetty's recent research, which tracked 20 million children, pretty much everybody in the country, who are now in their late 30s, and among other things showed very starkly a substantial black/white gap in income ability for men. i use this just as a primer. this leads us to seek answers. how do we close gaps and opportunity mobility? how do we help more americans join the middle class? how do we improve the economic quality of life for a broader set of americans? that's what we're seeking to

understand through our new initiative on the future of the middle class, and what we are all here to discuss today. but before we begin, a few housekeeping things to note. today's event is being live streamed. so good morning to everybody watching online. and if you are a twitter user, please feel free to tweet using #futuremiddleclass. and if you want to learn more about our new middle class initiative, there is a new web page set up, brookings.edu/middleclass, so i would encourage you to check it out. with that, it's my pleasure to turn it over to my colleague, camille bisset, to kick off the first panel. >> welcome to all of you in the room and joining us online. i know richard has already been introduced so i just wanted to do really quick introductions for the rest of our really all-star panel here.

we have the urban institute, the duian of work on the racial wealth gap. when she was at ford, she funded all the really important studies that led to our understandings around that. we have also have janet gore neck, edited a very well-regarded book on inequality and the middle class in affluent countries in 2013. we have heather boushy, head of the washington center for equitable growth, and is very well-known for her work on policy with respect to jobs and the decline of the middle class. so welcome to all of you. this panel is focused on two things. first of all, we want to understand how the middle class has been defined, and then we also want to understand, based on that, what implications that has had for politics and policy

here in the u.s. so i'm going to be -- this is going to be sort of like a little appetizer. we're not going to get into everything in a tremendous amount of depth. so please feel free to follow up with our panelists afterwards. but i'm going to start off with a question for all of our panelists, which is how do we define the middle class in the u.s., and is that definition changing over time? and i'm going to start with heather. >> oh. with me. great. i was looking to janet, because i thought we would start there. so how do we define the u.s. middle class? well, in the work that i have done over the years with gin williams, and in my book "finding time," i had a very specific definition of the middle class. let me preface this by saying i come at this from the perspective of economist and trying to understand the trends of economic well-being and how families are faring and how well the economy is performing for them. in our work, my work with joan and separately over the years, we defined it as what it's not.

so we said, okay, folks at the bottom third of the income distribution, those are low-income workers and families. so that's one group. and then we said, okay, well, at the top you've got folks that are in the top 20% of income, kind of like richard's definition. but we said only those that had a college degree. so looking at sort of elite families, you know, folks with college degrees but in the top 20th percentile. i'm sure many of us know some of those folks. we call those the top. and then we said, okay, this group in the middle is how we're going to define the middle class. i will say, from my work, that was a very useful definition. because it allows us to track sort of how that broad middle is fared over time, acknowledging there is this top and bottom. but wii will also say in my wor this is something that i developed in the late ots, early teens of the 20th century and my thinking on it has definitely shifted i would say somewhat

significantly. i'm kind of coming to terms with it since then. because we have seen this rising inequality in wealth and in incomes with the top pulling further and further away. and so one i think question that i hope we can discuss today is how that rising inequality with those at the very top pulling so far apart, how does that need to change our thinking and our definition of what is middle class versus this sort of maybe top 20%, upper class elites? i actually wonder if that term isn't as meaningful or as useful any more, both for understanding the economy and economic outcomes, but also for understanding politics. >> great. thank you very much. so not the top 20% and not the bottom one-third, basically. >> yes. >> jan. >> well, this is an enormously interesting question. and as i'm sure you'll hear and you've heard people define the middle class, academics and politicians in many different ways. sociologists tend to bring in occupation and education, other

people bring in family structure, aspiration, and self report is also used. but i want to just linger very briefly on the use of the framework where you define the middle class as some portion of the income distribution, which sort of is a part of what heather is doing there. i work with some -- with a research institute that looks at inequality in approximate poverty in the middle across many countries and over time and because of our data and methodological reasons, we almost all adhere to this portion of the income distribution. so let me just say why that is. and i understand that it's narrow. one dimension is always less rich than more. if you're studying a lot of countries, or say a lot of american states or looking over time, you need a measure that's extremely precise, and that can be standardized and repeated in these various venues and over time. it's almost impossible to do that with almost anything other than income. income is the most available. it's easily standardized. we know what that means. so excuse me. we tend to lean towards that. there are two approaches to it. one is to take a fixed portion of the income distribution. it's very common to take the

middle 60. bob solo has written a lot about that. in the book i edited, we allowed our scholars to make their own definition. we saw the middle 50, the middle 40. i know richard is now using 20 to 60. you can use 40 to 80. whatever it is, people freeze it. and it has the disadvantage you cannot then ask the question is the middle class shrinking or falling if you freeze it that way. but you can ask if it's share shrinking or falling. so the other reason it's a nice way to approach it, wherever you set those lines, which is an important question, it's intuitively graspable. the other waive to do it, briefly to say, which is also common is bonds around the middle. lester theroux from m.i.t. said 75% of the median, the middle quintile. we have done in our work 75 to 150 to 250, two-thirds, et cetera. that measure allows you to ask whether the middle class is shrinking or growing in size, as well as to ask whether its well-being or income is growing

or not. the reason i say that is -- and i'll close on this -- in the discourse about the crisis of the middle class, having punched these numbers around so much -- crunched -- not punched, i think. it makes me a little bit -- makes me a little crazy to hear people talking about the hollowing of the -- the declining of the missioddle and being very sloppy about that. is it shrinking in size and in fact in the united states since 1980, these bands around the median, it's fallen in size, but median income has inched upwards. so we really need to be precise. and to end on what heather said, i think we need five groups. because sort of poor/low income, middle and high is missing a huge amount of nuance of people like in the second and fourth quintile. so let's come back to that, thanks very much, janet. >> so i agree that the definition has changed over time. in the past, the perception was that if you work hard, you'll reach a station that's considered the middle class.

and that your children would do better than you had done. and for some time, this was the case for some people. in 1940, 90% of children earned more than their parents had. but by 1980, it was a 50/50 chance that your child would earn less than you had, due to the changing nature of work, stagnant wages, disparities in wages. the urban institute has just completed managing a project called u.s. partnership in mobility out of poverty, which brought together scholars from across the country, and one of the things they did was to define mobility, which i think is on par with middle class. and they didn't just define it by talking among themselves or using their own research. they went out and made visits to

communities all across the nation, and they listened to the people in the communities and what they had to say. and incorporated their insights into the definition. and they concluded that economic status was not sufficient to define mobility. that mobility also includes power and autonomy over one's future, and a sense of belonging and feeling valued in one's community. so this is a broader definition of mobility. >> thank you. so this is starting to get very interesting, right? we have this sort of not the top 20% and not the bottom -- and not the bottom one-third. then we had janet talk about various different ways you can measure it. and now kilolu is expanding it to talk about perceptions, self

perceptions and the way in which people feel they are either part of or not part of society. richard, why don't you close us out on the definition of the militants class? >> so the first thing i come at this as a recovering british person. so i'm struggling with this question. in fact, i struggle out loud, along with my colleagues, katie and alma krause. just going through many definitions being talked about. and i think broadly this idea between poverty and prosperity is kind of right. how you then define that is also right. i'm not so sure about 20 to 60 any more, even though i've used that before. i think the most important thing, we do have it clear who we're talking about, if we're to figure out what's happening to that group, why that's happening and what, if anything, we should do about that. so i don't think we should settle on a single definition or say there are is a right or wrong definition. but i do think anything working on that space is actually required to be really clear what definition they're using and why. because you get radically different results based on apparently quite small differences in definition. so one of my favorite philosophers, bernard williams,

said always look utiliout for p who have smuggled their answer into the question. so as long as it's above the table. i wanted to add something else, which is to try and add to the group, because it's been covered well, this idea of respect. i think it's something about middle class respectability and it's been written about this. to be in the middle class is to be worthy of others' respect and to be worthy of your own respect. he talks about respectability. and sometimes what that's done is you use it to define against other groups who are somehow not worthy of respect. and so that's when i think you get into ideas of aspiration of what your goals are and so on. it's obviously much more subjective. and one of the problems we've got in the u.s., it's growing a respect gap across classes. who is worthy of respect. and that will get us into conversations about race and class. but the sort of thinking there are values like respect, which underpin i think a lot of these economic ones, too. and so while we're

investigating, as we should, the economic gaps, i also want us to think about some of those respect gaps, too, and when the presidential candidate is caught saying something like deplorables to find a group, not to get political about it, and it was taken out of context, the reason that resonates, it speaks of a disrespect. and i think that's now being repaid, by the way. i think it's quite a lot of disrespect, and heather and jones work shows this, from those who might see the middle class, those at the top and vice versa. and so i think with he need to he heal some of those respect gaps if we're to have any really and reducing economic gaps. >> great. as you can see, this is going to be a really fascinating panel as we go forward. those were excellent and really interesting answers. and couldn't have been more diverse. so my next question is, why is the middle class important? so why do we have all these projects in the middle class? you've written a book having to do with the middle class. why are we concerned in what the middle class -- why don't you tell us, janet? >> thank you. i actually edited the book. >> okay. >> it was a lot of work, but i didn't write the whole book.

i want to focus on one story that i think is especially vivid in the united states, and to some extent in the cities. and that's the following story, that as income inequality rises in this country, which it has done, it's at a high level and rising, it's the top pulling away, and we know that. and one of the concerns -- and is this a somewhat stylized story. as people become wealthier and wealthier, they withdraw from a lot of public infrastructure. in an extreme version, you live in gated community, leaving people in the middle, and obviously low income people to live in the public world, which has deteriorated because of the political and financial withdrawal of concern from the top. and i just want to say -- bear with me for a moment. i live in new york city, i'm a new york city patriot, which is a city where people live side by side, that's the geography of the city. and it's an extraordinary thing to watch. and it is the case that in new york city, it's exactly an empirical example of what i just

said. the wealthy kids are in private schools, the middle class kids in public schools, which are in extraordinarily bad shape. the wealthy are traveling above ground. and i hardly live in great hardship, but the rest of us are in the subway, which is extraordinarily deteriorated, as probably anyone who has been in new york knows. crowded, dirty, dangerous. the electric grid. when hurricane sandy happened, my building, a rental in chelsea, was out. stairwells were pitch-black. no water. we were out for five days because of the electrical explosion. and well to do homes, generators, lots of light in the stairwells, the water was running. we were all running to stay with our wealthy friends. the health care system, the same story. i visited a building on the upper west side of manhattan recently. i did not make the people i was visiting very happy when i did a poll of the middle. upper middle class building, not extraordinarily expensive. 100 apartments. there was not a single child in the public school. not one child in the public school. and in the school chancellor of new york city at that time, who

whom i respect greatly, his children were in the private schools. as richard has written, it's understandable that parents want to maximize the life chances, the mobility of their children, and when they can opt out, they do. so anyway, there's much more to be said. elizabeth warren and robert frank have told us this story, what do they do? often they move to the suburbs into housing they can't afford, they're overindebted, they overwork, they can go into bankruptcy. so it's this destruction of the public infrastructure that seasonal one, but i think one of the most painful depleted sources. >> thank you. richard, what do you think of that answer? >> i love this idea of thinking about public goods, as well. a group who are kind of overwhelmingly dependent on public education, for example. and that's true at post secondary, as well. if you look at where do middle class kids go to post secondary college, they don't go to privates. they go to community colleges. the poorest kids tend not to go

at all. so i quite like this idea of thinking about public goods. politically, the middle class counseled. there is a lot of them. arguably you need the votes of the middle class, however defined, to win. i think we need to be honest about the fact that one of the reasons we've got this event and why john allen, president of brookings, has made this a big priority is a sense of the middle class aren't doing as well as they ought to be. there's a lot of assumptions in that sentence. but i don't think anyone challenges. as well as they ought to be. we probably wouldn't be having this conversation in 1970. so it's partly driven by the evidence. so i would like to finish with a point about mobility, which i think she was talking about. one of the reasons why the condition of the militants cldd matters, it matters in two ways. if life in the middle class looks tough, those of us it he top, you might call them dream hoarders, are actually strongly worried about the fear of falling. barbara aaron writes about the fear of falling. if you at the top and you look down and it's a big drop, you're

going to hoard as much as you can. so then you're incentivized. equally, if you're at the bottom and you look up, the incentives are -- melissa carney speaks to this in the next panel, are going to be affected a little bit by what are the conditions like in the middle class. is it worth the climb. so i think the condition matters for the middle class but matters for those on either side, too. to insulate against the risk of downward mobility and to incentive upward mobility. so the state of the middle class matters kind of for everybody, especially if you put an intergenerational lens on it. >> great. thank you both. so i think one of the interesting questions about the term middle class is that it is used in a variety of different ways. as we just saw, lots of different definitions. and so what i want to ask our panelists to reflect on is what is the political significance of the term middle class? so heather, i'm going to ask you to start us off on that. >> yeah.

i have a couple of responses. one that pivots directly on what richard said, with this idea of the middle class being something both you don't want to fall down into if it's not economically secure and something you may not want to aspire to. when you -- the middle class matters both as an economic idea and a political idea, and they overlay in really interesting ways. so, you know, thinking about what richard just said, if so much of what our public goods are supposed to support is the economic viability of the middle class, this, you know, the sense there are these good jobs that people in poverty can move up and out of, and that there is this economic security there. if if you don't have that economic foundation of economic security, and however you define this group, then you -- then -- at least in my view, this -- you can see that the way this overlays with political divides, as well, right? so then you're creating a set of political conversations that i

think we're living in right now. on the political side, one of the things that strikes me in looking at why we aren't investing in the kinds of public goods that both made the middle class and helped sustain it over the middle part of the 20th century is because our politically polarized politics aren't allowing us to do that. and there is a lot of new research coming out in political science at equitable growth we fund mostly -- we're working with a number of political scientists working on these questions. and one of the things coming out of that research, our political system here in the united states may actually not be set up to deal with class conflict, unless there is a strong middle class. so our democratic institutions assume or presume that you have these interest group politics, that voluntary institutions can make a difference. that there isn't some entrenched elite that is making all the political decisions, unlike in

the uk, we don't have a house of lords. we have a senate and a house that presume that some large middle class is making these political decisions and as a way in. if you don't have that economic foundation, we -- you have a politics that we see now, increasingly. and, again, there's a lot of new political science research showing this, that unless something that's on the political agenda is supported by elites, it doesn't actually make it through the halls of congress to the president's desk in terms of economic policy. and i would be happy to talk to anyone of aabout that whole body of research. i don't want to get into it all now. but this idea that the middle class matters not just as an idea or as an economic outcome, but also something that is kind of embedded in the nature of what our political institutions can do, it's something i think we need to be grappling with, as well. >> great. thanks very much. kilala. >> so the narrative that's been created about the middle class

attracts members of political parties -- at different political parties, and with differing perspectives. and this narrative is that members of the middle class are responsible. they're hard-working. they're family-oriented. i think that the work to be done is to create the narrative around those who have not yet reached the militants class or who have fallen out of the middle class that they also are hard-working, responsible, family-oriented. and it gets to the point that richard was making about respect. that a narrative needs to be created around those who are not in the middle class that they too are respectable. and this was another point that was made by the partnership on mobility out of poverty. >> thanks very much. i'm going to ask you to start us off on the following question. when we discuss the future of

the middle class in the u.s., how do we address the legacies of policies that were designed to promote the middle class and that simultaneously discriminated against african-americans? >> so policies, programs and practices that facilitated the upward mobility of white families and individuals and simultaneously impeded the progress of african-american families constitute a systemic barrier called structural racism. and these policies and programs and practices need to be eliminated in order for there to be equitable progress in upward mobility. research and policy analysis that merely presents disparities by race and does not examine the barriers that contribute to

them, but rather focus solely on individual behaviors will not lead to solutions that eliminate these disparities and achieve upward mobility. solutions to upward mobility. so economic and social mobility require the elimination of policies or practices, such as discrimination in the labor market that leads to occupational segregation, discrimination in housing that leads to families of color being informed about and shown fewer houses than white families are, even though they have the same credit worthiness. and the elimination of targeting communities of color for subprime loans when they qualify for prime loans. >> great. thank you very much. richard? >> so i think -- i agree with all of that. and i think we have to face the

fact that class and maybe especially middle class and working class, are not just a racialized category in the u.s. but very often a racist category in actual usage. and certainly that's true historically. i think there's no avoiding that. it doesn't mean we shouldn't think about work on class and -- but it means we cannot think about class in the u.s. context without also thinking about race. and it seems to me that very often if there are groups set up to look at the middle class as we have set up -- there is a brookings a.i. group. and joan williams is clear about this in her own book. there's an implicit prefix to those terms, which is white. sometimes it's made explicit, and people actually are honest about the fact i'm writing about the white working class. very often it's implicit. you don't need to add it. it's just the kind of image that's conjured up of someone who is white. and i think we actually need to face the fact it's used any definition is exclusionary. and just be careful it's not used in a racially exclusionary way. even now, if you look at within

the same income group as just mentioned in the paper i just wrote, if you look at those of personal incomes between 25 and 75,000, and you compare self definitions of class, among whites, 43% define themselves as middle class. black americans, it's 18%, within the same income bracket. so the self definition issue, which must reflect the sense of security, equality, respect and so on in society. and i think just -- look, the exclusion of black-americans from the middle class was the result in part of intentional public policy, in large part, of intentional public policy. the inclusion of black americans in the middle class will also have to be resolved intentional public policy. we're not going to i think address the consequences of intentionally racist public policy by just creating a level playing field and saying, well, it's fair now. it will take intentional public policy to undo the intentional public policy of the past. and i think whenever we think about middle class, we have to be thinking about race in that context, too. >> thank you both. >> i have a final question for all of our panelists.

i'm going to start off with heather. with the demographic changes in the composition of the middle class lead to different kinds of political bargains, in your view? >> i think so. i feel like it's nice to follow richard. because i feel you made a coherent argument for repairations, it's not enough to assume the playing field is level, but we need to do something perhaps to make it level. i don't want to put words in your mouth, but that's what i was hearing. on the demographic changes -- >> you want to -- >> i did not put words in your mouth. i did not. but so on this question, two points i want to make. one thing that we have not talked about at all up here yet is the overlay with a lot of these issues and family structure and the changes in the ways that families work and live and how that is redefined the middle class, which i think is part of the demographic changes, as well. and also age. so i think that a couple of the

overlays you see in the research on the middle class and how well this is faring is that families that have a single parent are increasingly in the bottom, however you define it. those families in the middle are the ones that are really struggling with most likely two earners that are both working but not really having what they need and creating that layer of economic insecurity. that also -- there's an overlay to race on that, often. but at the same time, the issue of age, which we haven't brought up, that younger cohorts of workers of individuals are increasingly less likely to kind of be in these upper income groups. we're seeing this -- that there is this cohort effect going on, as well. i say all of that as a way to introduce the idea that we're already seeing these demographic changes affect our political process. i mean, if you talk to folks on one side of the aisle, they are -- or, you know, we have

seen this since the election of trump in 2016. that there is this question about who is the middle class? who is the -- and are people of color women, young people, actually part of that middle class bargain, or when we're talking about the middle class, is that really to make the implicit ex politicis. is that really the white working class? i don't know about you all, but i feel like i've read at least a thousand articles, what's gone wrong with the working class, why are they so angry, without acknowledging we live in a country that is incredibly diverse. is going to be majority minority in some not too distant time frame. and where young people have experienced the brunt of this lack of upward mobility. and so we're seeing the redefinition of america's middle class, of those people who belong in our political -- not discourse, but process. that's the word i'm looking for.

and, you know, i feel like that's the hand to hand combat going on out there right now. so your question is, yes, it's everywhere. where do we end, though, i think is a much scarier question, just given how, you know, we've in the past 12 months have seen violence in many places over many of these issues. who is in, who is out. how do we define who deserves that economic security and who deserves a voice in the political process. so i hope that your work here as you all continue at brookings and the biden institute on the middle class tackles that issue. >> great. thanks very much, healther. kilola, i want you to address the demographic changes and the effects that might have on politics. >> so i think it might just be the other way around. without a change in policies and practices, the communities of color that are growing in size are going to be less likely to see -- experience mobility into the middle class. regardless of how hard they work or how hard they study.

and so this partnership on mobility out of poverty recommended a five-part strategy. the first strategy is to -- as i mentioned earlier, change the dehumanizing narrative about those who have not yet reached the middle class. and to create a narrative that is respectful. second is to create access to good jobs by improving the effectiveness of education and training. and by converting unstable jobs into jobs that have stable hours, wages that make work pay and have benefits that allow families to cumulate assets for long-term security. the third strategy is to ensure that the zip code in which you live does not determine how far you go in life. and this can be done in several ways. by revitalizing distressed

communities while preserving affordable housing so that those who live there are not forced out when the communities begin to improve. and by giving those who live there, the residents, a say in how the communities are to change. and then enhance access to capital. so those in the communities that are distressed have the ability to purchase homes or fix up the places in which they reside. or purchase businesses. the fourth strategy would be to provide support for families in ways that are empowering. child care that is affordable. so that people can work without having to fear that their child will be unsafe is an example. and then the final strategy is to transform the use of data, to identify data that's already being collected by state and

local, as well as federal agencies. and to create standards and relationships so that that data can be shared. and then share the data with the communities that are being studied. so that they can add their knowledge to the creation of solutions. so i think that those are the steps that need to be taken. >> great. thank you very much. i know our panelists know we're very time-sensitive here, so i'm just going to apologize to janet and richard and hope that in the questions you can also add your voice to this question about changing demographics. and i'm going to open it up for audience questions at this point. so do we have -- we have a runner. so there is a gentleman here. there is a young lady here. what i'm going to do -- hi, larry. i'm going to take three or four questions, and then we'll have

the panelists answer them. so that's how we'll do it. okay. go ahead. >> okay, thank you very much. larry owe checko, communications. a hypothetical question. 20 years from now, if this bark at the top continues pulling away at the pace it's at now, what is this country going to look like in terms of a middle class? will we still have one? >> okay. will we still have a middle class in ten years? >> 20. >> 20. >> sorry? 20? 20 years. i apologize. so we have a person over here, please. i need a mic. thank you. >> good morning. thank you very much. in the '50s and '60s, we knew who the middle class was, because father knew best, and the wife didn't work. in the '70s, we knew who was middle class, because even if archie worked in a factory, edith didn't work. now my question to you is, how many incomes does it take to be

middle class? and does this mean we'll never go back to the good old days, when the woman didn't or couldn't work? >> all right. thank you very much. how much income does it take to be middle class, and what does that say about our myth around the '50s, '60s and '70s in the u.s. i have a gentleman over here and a lady here. and then i'll stop and let our panelists answer. >> after the second world war, the american automobile industry dominated world trade in automobiles. and they could sell anything, no matter how expensive it was or how -- poor quality it was. and the treaty of detroit was the agreement between the unions and the automakers to give high wages and 5% increases in wages every year.

and that persisted until toyota came and destroyed that industry. now does that treaty of detroit time -- is that -- is the ghost of that wonderful time still haunt us and distort what our goals are for a middle class? >> great, thank you very much. so the impact of that history on our expectations as we move forward. this lady here, and then i'm going to stop. for the time being. >> yes. hi. thank you. yesterday i was at the national press club, and we were talking about health care. and when i think of using an economic definition to qualify or disqualify people in terms of labels, we look at things like access to medicare, medicaid, and we only focus on the economic number in the out flow. and i was wondering if you could comment on incorporating other measures that might better inform access to health care.

>> great. thank you very much. better numbers to incorporate access to health care. so we have a question about what the middle class is going to look like 20 years from now. how many incomes does it take to be middle class. what is the impact of the grand bargain between unions and employers in the golden age of the u.s. auto industry, what impact does that have on our political expectations now, and finally this question about health care. so i'm going to open it whomever would like to step up. richard and then janet. >> so if the -- i think if you said if the top 20% keep pulling away, what will it be like in 20 years, and i think it brings in the fact the middle class state is somewhat relative. it's not just about the absolute position of the people in the middle. but it's also relative to everybody else. so if you think about quintiles, which i like to, 20% slices, it kind of matters what the gap -- if you think of it as a wagon train. if the front wagon is like

somewhere off in the distance, that does have an influence on everybody else. so i think actually we have to be aware there is a relative position here. so the top 20% seals itself off, keeps running away. then actually i don't think the people in the middle are going to feel like they're getting a fair shout. so i think it does matter. the other two and three i think are bunched together and heather is going to be great on this. heather's book, "finding time" is essentially an answer to those questions. we have to be aware it's gendered, as well and the treaty of detroit and those years weren't wonderful for everybody. and to be really clear about it, i think it's reasonably clear that modestly educated white men were probably actually being somewhat overpaid in strict economic terms. because they're excluding from the competition black americans and very often women. the idea of a family wage was what a man had to earn to look after his wife and kids. that era is gone. so the idea of time and whose time is being used. it's literally heather's era -- and health care, i wanted to say about middle class status, i think it speaks to what's been

spoken for. the idea of security and stability and very often our measures kind of capture that idea. and for a while when i was in the uk, i could understand everything about america from the movie "jerry mcguire." i haven't been totally dissueded of that view yet. there is a moment in the movie when she joins him to go and join his new startup business. young people in the audience may not have seen this movie. and she's got the goldfish and they're going down in the elevator. the first question she asks him, you will have health insurance, won't you? not a single european understood that question. but everyone in america knew. the insecurity that comes from moving jobs. actually, it's very hard to measure that. but in a sense, you don't have much of a buffer and you worry about what if my kid gets sick. that is exacting a price on quality of life, which is hard to measure in dollars but is real nonetheless. so i think security in health care and other areas really matters. >> great. janet? >> yes. would i like to say something

that is an answer -- sort of an answer to the first question, but i point a realize i'm itching to make. >> the crisis of the middle class, however defined, is part of the larger question about high and rising inequality. which is an enormous issue in the united states. what i would like to remind everybody is that it's not inevitable. the inequality we have in the united states is the social construction. we made it, we live it. i don't think we should look forward 20 years and assume everything is going to be worse. it's not inevitable. it's not caused by technology. it's not caused by globalization. inequality is shaped by national institutions and i know that because i spent ten years studying the rich countries in the world, many of whom look very much like us in many ways, why inequality is flat -- it felg in a third of the rich countries. it fell in latin america as it became more affluent. i just want to say, i came back yesterday from luxemburg, where i spent four days with 40 scholars remembering the work of tony atkinson, one of the great

scholars of inequality. he passed away just last year before he knew he was ill, he wrote a book laying out 15 policy propositions about half of which are about narrowing market income equality, the wage distribution and the rest about taxes and transfers. we closed the event out by one of his close colleagues put up a slide, and it said, "let's be optimistic." so just to remind us once again that this is really not a story -- after the book came out -- i think there was a big misunderstooding of his argument and people thought we're just -- the ocean is just going to roll over us or whatever the metaphor is, that inequality is inevitable, it's going to rise at the top. it can absolutely -- it was constructed and with political will, and that's, of course, enormously difficult. it can be reversed. and so i think we should keep our eyes on that. >> okay. heather? >> yeah. so i would like to take the second two questions.

and i like the optimism. so that sounds great. let's end with that, too, in, like 15 minutes. say that again. so on this question, how many incomes it takes to be middle class. in my work, i look at using the definition i outlined at the beginning, for america's middle class between 79 and 2013 or 2014, the only reason that incomes for those families in the broad middle didn't fall over that time period was because of the additional hours that women put into the labor market. and i use hours specifically, because it's the added time that women spent, and then that led to increased in earnings over time. but it was that hours component that added work that really did make all the difference. it also made all the difference for low-income families, but low-income families saw their income grow much smaller and many families only had one earner, so it wasn't that two-income trap issue, but sort of women needing to work in low-income families. and, of course, they're doing

that without any of the supports they need. now, we remain the only industrialized nation, one of the few nations that doesn't have access to paid family medical leave. millions of families don't have the right to take a paid sick day. we don't have flexible or predictable schedules. we have overtime rules that haven't been updated for the 21st century. we can go on and on. and we don't have access to a safe, affordable and enriching child care for children both in the early years or after school. so it's not just the income, but it's all that stress, and because families don't have time. but i do want to take head-on this question about the treaty of detroit and the goals. i think that -- i mean, i take janet's point very seriously that this is -- that we can be optimistic. other countries have not seen the same challenges that we have in terms of the rising income inequality or the decline in economic security of the middle class. but, you know, again, the united states has always been a country that has had a broader middle

class. traditionally. i think not now, but traditionally relative to europe, right, we were found as a country where people left an old social order where, you know, they didn't have a lot of freedom or flexibility to engage in the economy they wanted to. it was also about religion and a whole bunch of other things. came to this country and you had this broader sense of shareholders in the economy. of course, all built on a structure of slavery, which was the antithesis of that, which we have also talked about a little bit. but what you saw i think in the middle of the 20th century was a coming back to that. this sense that things had gotten highly unequal at the end of the 19th century into the 20th century. progressive era undid that, created a set of institutions, not just unions, but super important unions, but antitrust policy and changes in establishing an income tax. all of which sort of recreated

this broad middle class. that's one reading. i'm sure we can argue about that, and that's not totally the purpose of this panel is to go back through that history. but i do think we can be optimistic that period in the 20th century wasn't an abration, but created by a set of political institutions which weren't as inclusive as they needed to be, by any stretch of the imagination. if we can do it once, we can do it again, and other countries have done that. >> thanks. >> i'll expand on what heather has said in terms of the answer to the second question by saying that african-american women have been in the labor market in large shares, much larger shares than white women. not just today, but back in the '70s and the '50s. and it didn't necessarily lead to middle class, even though there were two earners in the household. and in part because of what we have talked about already. being in occupationally

segregated into jobs that didn't pay as well. disparate wages, where they were earning much less than those who were similarly educated. and not having access, as heather pointed out, to wealth-building benefits. and so even though there were -- the labor was being put forth, the wages were not necessarily sufficient to move one to the middle class. and income is not enough to keep one in the middle class, even if you reach that stage. assets or wealth are also necessary to get through those times when there are bumps in the road, when there is unemployment or illness. and very often, african-american families did not have the ability to accumulate that wealth because they didn't have the access to those benefits that would allow for that. or open access to homes to

purchase. that also allows one to build wealth and equity. >> thank you very much. i'm going to take a few more questions. alice. this gentleman here in the checked shirt, and this gentleman here in the multicolored shirt. so alice. >> alice, brookings. it seems to me this able panel has posed a huge dilemma for policy and politics. right now we live in a country in which every group with possible exception of the top 20%, feels that they're getting the short end of the stick. and feels resentful. and that's not good for democracy. and the panel of several members have very convincingly said that the middle class successes were

built on the exclusion of communities of color by official policy. and that's undoubtedly true. but here we are in the situation where looking forward, aggressive affirmative action and other things we fan the resentment of people who say, wait a minute. i never owned any slaves. i never discriminated. the factory in my community closed and i need a job, too. so, we have a really lemm ma here. and i just wondered if anybody would comment on that. >> great. thank you, alice. we have this gentleman here. thank you. >> hi. my name is jack, an affiliate. i have a question about seg menation. s do we need to do finer

segmentation or do we actually -- is it harmful to be segregating people into different segments where you may engender resentment and solve somebody's problem an not somebody else's and should we look instead for common ground so everybody feels like they're in the same boat? >> great. thank you very much. this gentleman over here. >> as a first generation american baby boomer, i have always been struck by the question in my mind, why was i fortunate enough to be able to climb the economic ladder in this country when indigenous american population groups continued to live in poverty, generation after generation. i recently read "the warmth of other sons" and her point about the fact that i could be more

easily accepted by society on the upper rungs of that ladder because of the color of my skin than people of color. really struck me. and while you're trying to define the middle class, my concern really is how do we get back to a point where there is a level playing field and the opportunity to climb the ladder is available to all americans wherever they came from whenever they got here? >> great. thank you very much. i'm going to close questions there. i'm going to ask our panel, all of our panelists, to reflect on two questions. question of equity and how do we wind our way to a more equitable situation and in doing so what are the tradeoffs? and how will tradeoffs be responded to by voters and

policymakers? so, i'm going to ask richard to start. >> okay. so, i think this combines alice' question with another one and some of janet's comments about the zero sum nature of the game we're playing on this panel right now. i think partly that's because if the top 20% or however you define the top continue to take a disproportionate share of income there's less for everyone else to get. i think we need to remember the post-war years which we have talked a little bit about, i think between 1950 and 1973 the u.s. economy grew by roughly 4%. that's a huge upward escalation for white americans and white men. and brought everybody up to some extent and you don't have to be a determinist to think there's something to be said for a society people feel like they're

getting better off enough to reduce the resent of other groups and not just through economic deterministism but there's the political bargain that the case that people are more accommodating and more tolerant and understanding if they don't feel they themselves are being left behind. how you measure that is everyone at a good speed everyone's getting there and the sense of someone overtaking you doesn't matter. if someone cuts in front of you, that causes you to be very angry, indeed. why growth and equity go together because we need growth shared to people feel like they're not trapped in this huge zero sum game. there's know scape from that. >> thank you. >> so john paul talks about targeted universalism. and an approach where a policy

is available to all but those who are more in need benefit more. and so, an example would be the children's savings accounts where all newborn babies are provided an account at birth. this is publicly funded. and would be held until they're 18 years old so that each child would have an asset to start their life with. but babies who are born into low-income families would be provided a larger deposit and would be provided matching savings for any contributions that are private contributions made to that account. so that they have an opportunity to have their account grow by more since they're starting at a point further behind. another version of this would be baby bonds which are based on the family's level of wealth

rather than income because even if you're born into a higher income family that doesn't mean that the family has substantial wealth. much more substantial deposit for those who are born into low wealth families. and again, preserved until the child is 18 and at that point have a substantial asset to start life with. so that's out there. >> thank you very much. janet? >> well, i guess i'll follow up on what was said before. the question about how do we move to a more equitable united states, just again, i want to stress that it's really a question of political will. the institutions that would strengthen the middle class, increase mobility, reduce the income and wealth disparities, it's very -- we understand what those institutions are. i'm a great fan of the work

of -- raising the minimum wage. more progressive taxation. improving occupational pensions. it was all very clear. and i think -- and the argument was if we could do three of them we would reduce inequality. there are lots of ways in which we could tackle inequality. i think i agree very much with she said with asset builting for children and for lower income households and there's new book called "rescue in retirement" of savings accounts to plug the fact i believe the number is 40% of middle class americans have -- middle-aged americans have zero assets. i think we need to focus on the subset of political -- this is so obvious but of the public policy instruments conceivable sellable in the united states today and also things are not sellable today will be five and ten years ago with the demographic and economic changes that are certainly coming including labor shortages, race

pluralism in the middle class. i think the instruments are there and ready and to say one more things -- >> i have to stop you. >> we're the outliers in the world. >> great. thank you very much. you have the last word. >> wow. so excellent. thank you for a great panel. let me end by noting that the united states is and remains one of the richest conditions that the world has ever seen. all right? we should start and end every conversation about the strength of the middle class by noting we are an incredibly rich country but we are populated by a lot of people who are feeling economic anxiety and something fundamentally wrong there. i would focus on two things as we're moving towards equity. one is that increasingly both the income gains an the wealth gains in the country are going to not just the 10% or 20% but the top 0.001% and that is not a sustainable path we are on and

thinking about this agenda around ek tan i think, alice, i take your question very seriously. is it my job or your job, right? is it like -- we r we all fighting for the same job and therefore using whatever strategies we have to make sure that my people get access to this economic future? when, in fact, that's not the problem. right? the problem is that all of the gains are going to a very small number of people nobody's met or knows or sees because it's their hiding much of the money overseas. right? they're not being taxed in the way that they should. i think any strategy for getting at equity has to focus on addressing that massive inequality and again i would harken back to what we did 100 years ago when we enacted the set of policy that is brought us the middle class, maybe unions legal and taxing high incomes and how we're taxing weathlth we're doing that and put in

policies so people have different employers to compete for them to have -- to work for them which created higher wage gains so -- and over the 20th century a lot of those policies eroded and undone and thinking about that top is first step to getting at the equity issues so it isn't a fight for the one good job across a bunch of different disparate groups of people. that would be my optimistic? >> great. on that high note, please join me in thanking this fantastic panel. [ applause ] >> so that's -- is this live? so that's the end of act one. there will be a little scene change between acts so the second panel if you could please come up to the stage, please join me in thanking camille for the excellent moderation of that

panel [ applause ] do please check on camille's work. associate with the kellogg school, former chief economist to the vice president. but i think most importantly ben harris is a former fellow in economics studies at the brookings institution and so no stranger to this institution. ben is going to very briefly introduce his distinguished panel and then kick off a similar structured debate to the one we have just had. there will also be a brief scene change of this panel and our final act which is a keynote speech from the former vice president joe biden. i'll say it again at the end. when vice president joe biden finishes remarks, if you could please remain in the seats, we'll be grateful. i'll say that again close to that point. if ben's miked up, over to you. >> thank you, richard. so i think that was a

fascinating panel, really interesting. i hope that the second panel can live up to the high bar that you have set. let me start with the few words of thanks. first to all people watching online, thank you for being part of this. second, thank you to the brookings institution for partnering with the biden foundation. the biden foundation has a few key pillars. one of which is middle class economics and we wanted an event to feature the vice president, give his remarks on the middle class, but also, tease out the ideas we are talking about today and we sat down with camille and richard, put together this event and thrilled that it happened today. if i can also just add a plug, one of our key outputs to the biden foundation is a biden forum which is designed to be a discussion on middle class issues so if it's something you like talking about or reading about, visit the biden forum. let's start with quick words of

introduction. this is an all-star panel. it's rare in d.c. i think when you can think of the four people you want to have on a panel, call them up and invite them to an event and they all say yes. these are the first choices. this is the dream team and thrilled to have them here today and really quickly i'll mention the current titles. to my left is melissa carney, she's a professor of economics at university of maryland and also nonresident senior fellow here at brookings. ben alilski, senior vice president for policy and strategy at center for men progress. heidi sher holts, a senior economist and director of policy for economic policy institute and finally we have michael strain who is the director of economic policy studies with our next door neighbor here brookings, american enterprise institute. thank you for being part of today's event. the last panel was about a lot of things. including the importance of the

movie "jerry mcguire." but so but it was largely focused on issues and so the idea here is we wanted to talk about the middle class through the lens of the labor market. we wanted to talk about both how the middle class is doing today and what are some of the strategies that can help get to a better future for the middle class tomorrow. this is not a future of work panel. we're sort of let's just sort of agree to a five to ten-year time frame right now. not talking 20 years out. not talking 30 years down the line but today and then in the near future. so let's start with just a question. i'll ask all four of you. we'll start with melissa. but let's start by talking about the u.s. labor market. we have now kind of a good labor market. 3.9% unemployment. wages are growing at -- at least they're growing. so can you talk about, you know, one thing that you see as being a positive aspect of today's

labor market and one thing that keeps you up at night that you're worried about? >> okay. can i start with what keeps me up at night? because that's more salient to my mind and then tell you how i get myself back to sleep. what i do worry about is unemployment is low and sort of moved beyond the recovery at this point and that's good news, there are still a lot of people in this country who are left behind. we heard a lot of those themes mentioned on the first panel. we could talk about what came up clearly in the first panel is rising unequality in terms of income. i also worry a lot about the decline in employment rates and in particular among people who in previous generations i think we would have thought of as middle class folks so folks with high school degrees and some college. their employment rates declined by nine percentage points over the past 20 years and even though unemployment is low employment among prime age individuals is still very low by

historical standards. last i checked 25 to 44-year-old men, 85% working. lower than any time in sort of more modern history before 2000. and so, the sort of retreat from the work force of prime age and young individuals keeps me up at night. the optimistic spin on that is that in college attendance and educational attainment is rising so i very much see this through the lens of educational categories and that middle category of high school degree and some college degree and not college degree crushed i think in the labor market and with wages. but the memo seems to have gotten out there. access to school expanding such that more people going to college. women and men. across race and ethnic groups. so that's good. we're up to about 26% of 25 to 29-year-olds have college

degrees. it is not enough but the trend is in the right direction. one like caveat to that is folks outside metro areas are not increasing their educational attainment at the same rate and hopefully we'll have time to come back to it. rural americans and i think this also relates to the conversation of who used to be middle class and feels like they're not middle class anymore, they don't seem to be increasing educational attainment at the same rate and doesn't portend well. >> we'll get to the retreat from the work force in a second. ben, one good thing, one bad thing. >> okay. i'll start with the good thing. first, as we've seen a tightening of the labor market i think we have started to see businesses and society generally start to realize we need to bring in folks who have been excluded from the labor market. think about people who have been just as involved in the past and excluded from employment for that reason and seeing businesses to ban the box and see places like pennsylvania where the state legislature passed a clean slate law that

would basically say for minor nonviolent offenses those are sealed so that those would not impact on future employment and that would be automatic and that's really sort of a first of its kind effort that i think augusters well for additional action through the country. and i think as you see these businesses seeking out new employees and finding that they're having a hard time hiring folks they talk about the skills gap but they don't seem to be willing to raise their wages to actually set the signal that they need more labor in that particular field. but they are opening their capture of who they're bringing in and that's a good thing. in terms of the negative, i'll agree entirely with melissa. if you take a look at it, there's a really significant problem thinking about noncollege workers and specifically those without a bachelor's level degree and just as an experiment and to make it more interactive, who here has a

bachelor's degree? just raise your hand? that is very much not representative of the country. which you might expect at brookings. but by one measure -- >> so you all went to college. don't feel bad about it. >> when you look across the country, almost two thirds of workers do not have a bachelor's degree. right? so that's the middle class that i want to be thinking about and talking about. and when you think about their wages, they have been stagnant. so they've been about same from 2000 to today. as melissa noted, the employment rate is particularly problematic for prime age workers. it is 3.4 percentage points below 2000 generally and 7.6 percentage points below 2000 levels for black men without college which is really significant. and the working class is not exactly who you'd imagine.

those without a college degree. it's 46% women. it's people of color. it's not just this white working class that the president is often talking about. thinking about the combination of wage stagnation and declining unemployment you really see actual drops in household incomes. and that makes sense because you hear voters say americans, about half of americans will say that they have faced serious problems finding good jobs with decent wages. and what i would positi it is t is a structural demand. it's not just cyclical. going on for men since 1960s and a peak for women entering the workforce in 2000 and then you've seen stagnation there. so why is this happening? why are we seeing less demand for these workers while we have global competition for a low skilled work. we see also automation which allows smaller number of

individuals to produce the same amount of output. you see monopsony means they have an ability to set prices for inputs and decline of unions which have historically and other bargaining power of workers historically gotten a wage premium for those folks. we have had release valves. they have been things like more debt. working more hours. to accommodate as these trends have occurred but we have kind of exhausted those and what brings us to where we are today. so to sum it up i want to share an anecdote i heard from someone which is back 30, 40 years ago you could graduate from high school, gate manufacturing job and that would pay a really good wage. you would have health insurance. you would have a stable job. today, you have to probably get an associate's degree. you're paid less and will have no stability and security in the employment. and that when people talk about

manufacturing jobs, what they're talking about is that ole kind of manufacturing job and so that's what i'll leave you in terms of the trend we're facing. >> hidy? >> okay. so my main -- i'm going to echo a lot of things people said about concerns. my main concern in the labor market is profound and rising inequality we have seen for most of the last 40 years and been lots of already discussion about the causes of that. i just do want to echo what janet said that it is not a natural outcome of a high-tech, modern economy. these are policy choices that we have made over and over and over again for the last four decades that have led to these outcomes which means with the political will they could be reversed. another component -- i know this is one concern but i'm just -- >> it's okay. >> another thing in this concern that one other component of the high inequality we have been seeing and i'm concerned about is persistent and high gender

wage gaps and racial wage gaps so even when you control for education, age, geography, a set of things there's still big gaps in earn wages and black and white workers and one of the more positive it trends is there's been a steady improvement in the gender wage gap over time. but that is not the case for the racial wage gap. we are not seeing improvement in any -- if anything we're seeing somewhat of a deter ration in the racial wage gap and serious issues to attack there. that's one concern. and then one trend i'm really happy about, actually a little bit different or a flip side of what you guys said is even though we are -- we did see a huge drop in labor force p participation in the aftermath of the great recession, it's depressed right now. we are actually seeing it grow. so since the prime age labor

force participation hit its trough in the third quarter of 2015 and for the last more than two and a half years it's been pretty steadily increasing. that's great news for those workers. this is great news for the economy and also is a very good lesson for all of us. in -- starting in 2011, i think, when the labor -- when that employment rate was still incredibly high we started to see a whole class of pundits saying -- i think they were saying it because they wanted to support their agenda of a return to austerity, saying that the high unemployment we have is due to workers not having the right skills, these workers are never coming back into the labor market. this is sort of where we are now. they were wrong. the labor market since then has steadily improved as aggregate demand increased. it is a really useful lesson to all of those. when you hear people saying, oh, it is going on now, the terrible

outcomes are natural and structural. keep that in mind to maybe you want to dig in that there are policy solutions to some of those things. >> thanks. michael? >> so my -- the thing that worries me is the same as melissa's and been echoed in some other comments. the decline of employment rates. this is a seven-decade long problem. so i think it is the case that over the last several decades a lot of this can be explained by reduced labor demand driven by changes in technology and reduced demand driven by globalization for lesser skilled workers and predates the trends. this problem goes back to when we started measuring the data and coming up with a consistent and unified explanation for this has been extremely difficult for economists and the trend -- you know, kind of longer term structural trend doesn't show any signs of reversing. which is i think deeply

problematic for both economic reasons and also for social reasons. despite the fact that participation has been rising in terms of the business cycle since the great recession. but since that's melissa's i'll cheat and give another one. i am concerned about how little we know about the labor market today. existing government surveys are plagued by increasing nonresponse. existing government surveys are plagued by increasing -- you know, increasingly inaccurate data. we know less than we used to. we know less than we should given the surveys. the statistical agencies need more resources to modern the surveys that they can better capture what's happening in a 21st century economy. you know? all sorts of things we don't know. we don't know much at all about how fell felons are faring in

the labor market. we don't know much at all about people who may be working off the books and who are confused by the way that survey questions are designed or people who are working in the gig economy and are confused by the way that the survey questions are signed. you know, to the point of legitimate debate of how important is the gig economy? we know when you look at the official statistics that fewer and fewer and fewer prime age men are working but we also, you know, don't see prime age men piling up on the streets in terms of homelessness or in terms of starving to death. is this all kind of like a cosmo cramer from "seinfeld" thing. i'll try to beat richard of an earlier dated reference. you know, what is going on? and in having a more robust statistical system that can get at some of these questions and then modernized to reflect today's economy i think is important. what's making me feel good?

i'll steal heidi's answer that we do see -- there was a lot of talk about, you know, people just unemployable and never coming back into the labor market and, you know, that's been proven wrong so far and we have seen increases in prime age employment, for example. an that's been very edifying to see. again, i'll -- i'm going to cheat and do one of my own, too. we have learned something about the 2018 macro economy, as well. we have learned that we can run an economy hotter for longer than we thought. when the unemployment rate dipped below 6%, you started hearing some voices say, you know, we better look out. price inflation is coming up. and then when it fell below 5% we heard more voices say, you know, the fed better be watching this. we'll see some price inflation. now we're below 4%. and, you know, we do see some price inflation.

but what we're seeing is a return of consumer prices to the fed's target. we're not seeing any sort of rapid acceleration that would make you searched about inflation per se. you know, that is not something that professional forecasters would have predicted. it is not something that congressional budget office would have predicted and not something i think most economists would have thought to get into the threes and have trouble hitting the inflation target so the lesson here is that we can run the economy hotter for longer than i think we thought. we can pull more people into the workforce which is a very good and pull some of the hard to employ people into the workforce and even better. i could be eating my words when we wake up six months from now and living in the hyper inflation so i feel glad that i don't have j. powell's job but for now it seems like the experiment is accrued to the benefit of these marginal workers and workers displaced during the -- these vulnerable

workers, excuse me, and workers displaced during the recession. >> just two observations on your answers. one is that after a sort of a decade of labor market expansion and with a 3.9% unemployment rate you're still concerned about participation. almost across the board. things you were concerned about are worse than the things that you were happy about. a little bit pessimistic as a job. >> that's our job. >> well yeah. but just an observation. so let's just follow up on this sort of theme of participation. melissa, you wrote this great paper. >> thank you. >> i think it was a great paper. >> thank you. >> with katherine abraham on why -- explains why we're seeing what we're seeing with the e. pop. with the employment to population ratio. maybe distill it down to the main themes. what is the decline? two, why are we seeing what we're seeing? >> sure. i'll give the cliff notes

version. so, you know, the first part -- the first part of the paper katherine and i thought it was important to get out the facts in employment decline and a lot of it's been mentioned and i'll highlight four key facts. which is one, employment is steadily trending downward. this decline in overall employment rates is driven by young and prime age workers so every ten-year age group from 16 to 54 has seen their employment rates decline over the past 20 years. that's been offset and masked to the fact that older workers are working more. and it seems not because they're feeling financially insecure but they're healthier and more educated than past cohorts. those are two things. the third is i mentioned the largest declines of those i think previously considered like target for the middle class, those with high school degrees and some college. so college educated workers are still working at very high rates. non-high school -- you know, folks without high school

degrees still have pretty low employment rates and they always have and a middle group really hit and the fourth thing i want to point out, because there's, you know, a narrative out there that a lot of employment rate decline driven by the aging of the workforce. that's important thinking about productivity. that is true. the workforce has gotten older but as i said older workers are working more and masks the importance of the decline in prime age workers and be rd composition calculations the work can account for 80% of the decline in overall employment in the past 20 years. okay. then we critically survey over 130 academic studies. okay? so this was a labor of love. but there's a lot written, michael's point notwithstanding, there's stale lot we don't know and careful work by a lot of rigorous scholars and survey that evidence and draw conclusions, what we think the best estimates of the literature

are of the causal effect of a variety of factors on employment rates and then combine the best evidence that exists from the literature with data on actually what happened. for example, we survey the literature of the relationship between the adoption of robots and employment outcomes and then we combine that with did da that on the number of robots adopted in the u.s. industry. the best causal impact of being imprisoned and then data what happened to imprisonment rates. our conclusions are that decline and demand for a subsets of workers has been the driving factor leading to employment rate declines. okay? so in particular, increased import competition of china since 2000 an adoption of robots has really led to sizable declines in employment so i think it's important to note

that this leads me to respectfully disagree with the suggestion that's been made by other panelists today that it's not about global labor market trends. it is more about policy choices. you know? i think we have failed to respond to these trends and there's much more policy can do but there are these large global forces that i think we have to acknowledge. they're not going to go away and if we don't acknowledge their existence we could further disadvantage u.s. workers. okay. so that's what we have concluded about demand for workers. there have also been supply side factors less important but nonnegative libl. expanded access to and generosity of disability insurance through social security and the veterans affairs department, that's led some workers who were on the margin of, you know, retraining or taking a low wage job, they're choosing disability insurance instead. not to say that's not a program we should have and a program we

probably need to think about and reform. increases in effective minimum wages across states and localities have led to -- not massive but nonnegativelible reductions for young and low skilled workers in particular and the increase of incarceration of overall aggregate employment rates probably had a modest effect on employment. not negativelible and had very little labor force attachment to begin and suggest that is we should be doing more to make that those folks are engaged with the labor market and there's an opportunity to use, to reform the prisons to use a -- this is contact with folks who have low labor force attachment. make it more about labor training reform in prison. real briefly, you know, because there's a long list of things we looked at, hypothesis thrown

around and policy conversations, some we conclude enough evidence to suggest that they haven't been important. ones where we think are provocative, potentially important and the evidence is unclear, includes, you know, changing social norms. nick ebberson has written about that. some good research is needed there. inl creased opioid prescription, hard to separate out the cause and effect. increasing learn your, technology and occupational licensing getting a lot of attention. our, you know -- katherine and i view that as certainly welfare reducing probably inefficient and i think we need more research to say. >> great. and, so, let's just transition now quickly to taxes.

2017 saw a -- >> hard transition. >> it's a hard transition. but so 2017 saw a massive tax cut. michael, your former colleague kevin hasset said that the corporate tax cut of 35% to 21% had a major impact on wages or will have a major impact on wages. do you agree with kevin? will it boost wages by $4,000 a year down the line? >> well, i don't think it'll boost wages by $4,000 in the near term but i do think it will increase wages. you know, what the -- what a reduction in the corporate tax rate does which by the way is something that the obama administration was behind, that economists have all -- you know, political views typically have been behind relative to where it was in current law, of course, the obama administration wanted to reduce it by significantly less than the trump administration ended up reducing it and widespread agreement that the rate was too high where it

was. makes investment after taxes a little bit more profitable. and that's going to induce some additional investment on the part of businesses, some additional investment on the part of businesses to make workers more productive and if workers are more productive their wages will go up. that kind of chain of events, that story is essentially true and so we should expect to see wages go up. we should not expect to see wages go up six months after the rate went down because it takes a while for businesses to invest, takes a while for workers to increase their productivity. you know, whether it's a year and a half later or three years later or five years later, a lot of that is really contact specific but the question whether the reduction in the corporate tax rate will increase wages i think the answer is yes. there are a lot of caveats to

the extent that profits driven by rents and not driven by investment then this will not have an effect. certainly some corporate rents driven by rents. so the precise magnitude of the wage effect will be studied and will know a few years from now. but i'm confident predicting that a reduction in the corporate rate of that magnitude will increase wages. one caveat is that a lot of the stimulative parts of the bill expire so the ability to deduct all of your expenses immediately, for example, that has an impact on investment. that expires and probably extended but that introduces some uncertainty. a major complicating factor is the increase in the national debt that's driven by the overall tax bill. not just by the reduction of the

corporate rate but by everything that was inl colluded in the tax bill. that increase in the national debt will work against increasing business investment by pushing up interest rates and making it more expensive for businesses to invest. over a long time horizon if we don't do something about the debt it is very possible that the overall tax bill will push wages down by about the same amount that the increase incentives to invest push wages up and will have something closer to a wash. and the third point that i would make is that, you know, while it is the case that reducing the corporate tax rate is a good thing to do for worker wages it is also the case not a sufficient thing to do for worker wages, particularly for low wage workers which is what i think the majority of the sen should be. we should not say we cut the corporate rate and did what we needed to do. we should be thinking about other things that are specifically targeted at the low

wage labor market, as well. >> and so, transitioning to labor policy now, heidi, you served as the chief economist at department of labor for obama administration. up until the very end. we are now -- i don't know, a year and a half into a new administration. can you comment on just, you know, are there -- i was going to assume you're troubled by what happened in the trump administration and ask you what troubles you about what happened in the trump administration with labor policy? >> i think at the department of labor the umbrella way to describe it there's ban shift from prioritizing the concerns of workers and benefits and safety and retirement savings to prioritizing the concerns of their bosses. and you can see that show up in like every little thing that the department is doing. and i will just -- i'll mention a couple but they most salient

one actually turned out well for workers but it's a very stark descripter of values shift at dol and that's this thing that -- proposed rule they put out last december that would have shifted -- would have allowed employers to take control of the workers' tips and i think that dol thought that they could sort of slip it through quietly under the guise of tip pooling but there are a lot of people paying close attention to dol is doing and got out the word that this rule is about allowing employers to take work earls' tips. there was huge outrage. it was fueled by this great investigative reporting this shows that dol had done their cost benefit analyst showing that the rule would have been terrible for workers and because of they just buried it but it -- it then got out through a great investigative journalism. so dol sort of on the run

because they're being bled dry by all of this stuff going on. so they actually came to the table to compromise. so embedded in the omnibus spending bill was an amendment to the fair labor standards act that says employers cannot take workers' tips. workers' tips are the property of the workers who got them. so that ended up fine. but it is sort of -- it nevertheless shows where this dol is. the national restaurant association has wanted to get control of workers' tips forever and they've never been able to find an administration that would attempt to do it for them. and this one did. so that was a big thing that it turned out okay. other things that are not turning out okay i'll just quickly list a couple. overtime rule, 2016 overtime rule that increased the value -- the threshold below which workers must be paid overtime pay if they work more than 40

years a week, that rule has been completely abandoned by the labor department i think what is going on right now is that they're writing another rule going through another rule making that will drastically reduce the 2016 threshold. and then another big one for retirement savers is the total abandonment by the trump administration of what is known as the fiduciary rule that's the rule that just said, like your doctor is already required to do, like your lawyer is already required to do, your retirement investment adviser has to actually act in your best interest and they can't do things like steer you to investments for a lower rate of return and give your adviser a bigger commission. the rule would have outlawed stuff like that. the rule has been totally abandoned by the trump administration and is at this point it's the curtain has closed on that rule. so there's more -- there's a --

it's sort of death by a thousand cuts at -- in the -- what's going on there but those are a couple biggies but it is just this big value shift towards protecting workers which is the mission of dol to much more prioritizing the needs of their bosses. >> thanks. now, so, ben, you were like heidi a leader in the meredith mcgehee administration coming to labor policy. let's ask you a different question. you have written a lot about the connection between the size and health of the middle class and mobility. we heard about this a little bit in the past panel. why does -- can you just talk about why exactly healthy middle class matters for snoeblt what are the mechanisms that affect it and what you found in your own research? >> sure. i can't resist making one comment on the last question. and to build on something that heidi mentioned on the overtime rule, you know, a stated purpose of the fair labor standards act to spread work around.

so it is very telling to me as the panel really focused on the employment rate and the issue of labor force participation and the availability of decent jobs, it really seems to me that the overtime rule which has two affects, raising wages and creating more work, which, you know, even would be acknowledged by many industry groups like is very telling that was actually the rug was pulled out from under it with a policy that could have really helped. but on to mobility. i want to start just with a brief story about my grandfather. he grew up in poverty. as did my grandmother. on my mom's side. and he went into the war, of course, and then he worked in produce for his entire life. attained a high school degree. and was able somehow during that generation's time to buy a house, put kids through college,

get a pension, a real defined benefit pension and even today lives independently up in rhode island based on his own savings and pension. and i have really thought about this a lot as to could someone coming out of high school now get to do those things? and i think for many the answer is a very loud no. and so, this goes to the heart of the american dream. right? so 97% of americans agree that we should have a quality of agreement. 97% of americans don't agree on almost anything but they believe there should be an equality of opportunity for americans. if you take a look at the chance that someone born at the bottom of the income distribution in their family's household gets to the top, we are behind other countries. in canada, you have a twice -- you're twice as likely to get to

the top if you're born at the bottom. that's really striking to me. and so, what we have seen from especially rod shedy's work referenced earlier intergenerational mobility has been flat. relatively. but in absolute mobility there's been a sharp decline so if you think about this. the cohort he studied roughly those born in 1980, only half surpassed their parent's income. and the other thing that we learned from some of rod's research is that place matters. where you're born matters for your intergeneral asianal mobility but one challenge is people aren't moving as much as they used to. you don't have the geographic mobility to achieve economic mobility. i took a look -- four or five years now, i looked at the work with a colleague of mine, sasha

post. you know, he had at that point looked at 28 different correlates of mobility. and they ranged from everything from commute time, right, to inequality to indemonstraic pov. a percentage of the commuting zone fell between the 25th and 75th percentiles in the national xhk distribution and we had this hi hypothesis of strong middle class do things like invest in education, have better civic engagement, engage in critical social services and this is based a lot on some of the foundational work that heather of the last panel had done. we had this hypothesis to see

greater mobility in those places and sure enough looking at the size of the middle class that was stronger of a correlation than 26 out of 28 correlates he looked at after accounting for we were not just pulling in the density of the poverty in the regions. this is really, really striking to us. and what that roughly means is for every ten percentage points increase you have in a community's middle class, you'd see five percentiles that someone born at the bottom would rise by the time they got to be 30. that's really striking. now, i also want to caveat as we did in the paper, it is not causation so, you know, we have a belief that there are a number of reasons we might think it leads to these outcomes. the other thing i'll note is this didn't work across all racial groups. what we saw was in general this did apply across racial groups

in most areas but areas of high concentrations of black residents, you saw -- you still saw that positive core relation but it was mitigated. it wasn't as strong and i think -- i would associate myself with many of the comments of the previous panel because i think what you do see is issues like structural racism and discrimination in housing, in employment that leads to that sort of mitigated affect of having a large middle class in some communities. but still, you still saw positive correlation and it really told me or instructed me by building middle classes, by putting in the investment of a strong and ro bus middle class that helps people not just in the middle but people at the bottom have a good chance of rising up. >> let's talk a little bit about labor market competition and impact on the middle class. we'll start with michael and move this way. we are starting to hear more and more about competition or lack

of competition, what's driving it. brookings had an event in february part of it. heidi you had an event. michael, from your perspective, is there a lack of competition in the labor market? is it gets worse? if so, what needs to be done to fix it? >> i'm not overly concerned about this issue. which probably putts me at odds with some of the other people on the panel. you know, i do think that there are regulations in the labor market that clearly affect competition in a negative way, things like occupational licensing, for example, that are kind of blindingly obvious things that need to be fixed. when you hear about, you know, non compete agreements for people who are making sandwiches at jimmy john's, you know, that obviously is ridiculous. i think occupational licensing has a real effect. i'm just not sure whether those jimmy john's non-compete

agreements are actually enforced on a broad enough scale this they would have an affect but they seem kind of silly when you think about them. so, you know, there are certainly kind of specific things you can point to i think in the labor market and say, well, you know, it shouldn't take 2,000 hours of training to be an interior decorator or cosmo toll gist or whatever. but in terms of, you know, a systematic problem that is something that should, you know, rise into the top three or four things we're concerned about in the labor market, you know, it's -- it does not even approach the top three or four things that i am concerned about. and i think, you know, when -- i mean, you know, again, i think the right place for policy to be focused is on the lower end of the wage distribution and among lower wage workers. and there, you know, it seems to me, you know, if anything that part of the labor market can be more competitive than segments

of the income distribution that are higher up. you know, where there are, you know, more legitimate needs for licensing, things like surgeons and lawyers and where, you know, there are fewer employers and actually is more opportunity for the kinds of salary collusion people are concerned about. >> so what about industry concentration? does that worry -- you talked about non-competes. what about increased concentration of employers? >> those are separate issues. again, i'm not -- i'm not overly concerned about industry concentration. you know, i do think that by some statistics, you know, the top 4%, top four firms in the industry or whatever, you do see more concentration. i think a lot of the conversation ignores the benefit that is come from size. that are real economies of scale and that really accrues to the

betterment of consumer welfare. a lot of this conversation is currently around big tech issues which is confusing to me because when i learned economics i thought that monopoly meant that the price goes up and quantity goes down but g-mail, facebook, twitter are all free and supplied an infinite quantity. this is just not -- you know, i mean, look. there are real problems. right? people aren't works. it's difficult for people with criminal histories to get into the workforce. people are not getting skills beyond the high school level when they should be. there are serious problems of family structure with labor family implications and some parts of the country of discrimination that have real labor market discrimination or affects. we aren't subsidizing earnings enough for people without children on the lower end of the labor market and so many issues beyond the non-compete agreement of jimmy john's that may or may not enforced that it's hard for

me to let, you know, this rise to the top of my list. >> interesting. heidi, whats your take? >> i might be able to help because i think i get something that could bridge is a very interesting conversation going on right now about increased concentration, about reduced competition in the labor market. but there's something about what you said that i think is perhaps useful. so one of the things if you are trying to explain the trends that we have seen in inequality over 40 years, massively increasing inequality, how much of increasing concentration right now can actually explain that? and i don't necessarily think that that -- i think there is -- non-competes are an issue. increasing concentration is an issue. but i don't think it has a lot of power to explain a huge portion of that massively increasing inequality over that period. but here's -- >> excellent. we agree. >> so here's -- but here's

potentially useful way to think about what might -- how these things might be connected, concentration or lack of competition and rising inequality. let's think about what perfect competition really is. perfect competition is like this worker's utopia. what it means is that -- essentially -- employers have to pay workers the value of what they produce. and if they don't pay worker it is value of what they produce the workers will immediately quit, immediately find another job at an employer where they will get paid the value of what they produce and the employer that tried to pay them less will go out of business. that's what the model of perfect competition says and it's bonkers. like, we all know that that does not describe huge swaths of the labor market. and it never did. employers have always had power

in various parts of the labor market to set wages below a worker's marginal product and so the thing that's different now from 40 years ago is that 40 years ago there were counter vailing standards and institutions that gave workers power. to counter balance that employer power to set wages lower. workers had unions, stronger labor standards. as those things have eroded over the last 40 years, we haven't then had the things that was a check on the employer power that was due to the lack of competition that was all -- lack of perfect competition that was there all along so i think that there's a -- it's a little bit of a twist on what you are saying but gets back to the -- you know, it sort of gets back to the things that you -- that are -- should be front and center when we think about how to address lack of competition in the labor market. we need unions, labor standards.

we need the things that give the counter vailing power to workers as a check on employer power. >> so, melissa, let's get your take and then ben. >> okay, great. so there's a lot here. i think i tend to agree more with -- well, you both agreed that increasing firm concentration has not been a key driver of either unemployment or wage. there's a point to say. the first is let me give a counter story to the idea that sort of firms with market power are capturing rents and not sharing with workers. one of the things we do know that's been a key driver and increasingly important in wage dispersion is dispersion across firms. so what i mean is that there is more dispersion sort of within jobs, within occupations, within industries across firms than there is within a firm.

okay? so let me put it differently. for whatever job you have, what wage you will get is increasingly determined by what firm you work for. if you are an engineer, you will do better at google than at some engineering firm in a small town in the midwest. okay. that's for the same level of skill. that sort of spins this story differently which says that, you know, these firms that have greater market power, they're more profitable and they're sharing in those profits or productivity with their workers. that has a very different policy implication than thinking about larger firms as capturing rents from workers. the policy implications there are, we have to figure out why are some firms better at turning inputs into output, why are they more productive and what can we do to facilitate the spread of ideas or their organization or management practices or whatever in a way that benefits more workers? i think the role of firms is really important, but it's a

little bit more nuanced than just big firms, bad for workers. the data poses almost the opposite relationship. the second thing, though, that's related to this is that increasingly there is what we refer tos at geography of jobs. so, you know, these firms in high productivity places, new york, san jose, san francisco, they're doing really well and the workers and people who live there are doing really well. okay. so why is it that those places are growing and other places are declining and why is it that workers are less likely to move than they were in the snast -- past? this is one way we have sort of in dying labor markets there is one employer left and yes, they have market power over the workers but part of the reason they have market power over the workers not because the workers aren't unionized necessarily,

because the workers have limited skills, limited places to work and they're not leaving. we have to think about why workers seem to be stuck in these distressed areas, how much of that is they don't have the information about where to go, they don't have the liquidity or cash to move, they don't have the skills where they feel like they could get jobs. we really need to take those challenges seriously. and the third point, like, you know, i just -- i worry that the more we push on institutions, like i would love to say let's give workers back their b bargaining power with a higher minimum wage but the truth of the matter is there are these other forces we can't ignore, right. i'm enough of my mother's daughter that it makes me sad when i walk into a restaurant and i have to put my, you know, my order in to an ipad. my mom wouldn't get an atm until two years ago because she thought that was not nice to bank tellers. get that.

and it's sad, right, but i'm also enough of an economist to know that, you know, if a small restaurant owner has to pay $15 to his sort of low-skilled worker, he's going to get a lot of robots or ipads and we have to -- like that's a tension if we want to help workers and the middle class i think we have to be honest about. >> ben, what's your take on competition? >> i have to respond what melissa said. i think we've agreed on a lot of other things but here i think i disagree pretty strongly. when you take a look at care jobs these are not been robotics and we don't pay them well. >> right. >> and so -- >> we know robots can't like do that. >> and so i would say bargaining power plays a bigger role than melissa is conceding. understanding that there are also other trends i've acknowledged in my early remarks around globalization and automation. i want to tell a story.

i'm not an economist like the rest of the folks here. so i'll tell a story which is that you had a much more robust worker bargaining position back a number of decades ago and there's been be a vicious cycle and this will lead back to competition, which is, businesses sought to be able to depress wages for obvious reasons, they did not want to have their work forces unionized and they attacked unions and the courts and legislatures with employees and ultimately yunion density started to decline. at the same time that happened there's a political economy story, as there was less of an institutional worker representation to push back in the political arena on things like minimum wage, on things like overtime, you saw businesses were able to suppress some of the stronger labor protections that you saw historically. and then we sort of see the next

iteration which is around competition. i don't think that it is driving a lot of what we're seeing today but it is a dangerous trend. so whether you're talking about nonpieces at jimmy john's we all up here would agree is kind of ridiculous and only an anti-competitive practice, i would also say there are other practices that have been creeping in, nondisclosure agreements, mandatory or forced arbitration, so even in light of this most recent metoo movement you're seeing people come forward, many people have felt in the context of sexual harassment, they couldn't because their employment contract had a mandatory arbitration clause and nondisclosure agreement they couldn't get around. in fact, many employers are using these mandatory arbitration clauses to get around claims around wage theft which is really ridiculous. so as you have firms that have increased political power and are donating all of this money and have an outsized voice in

congress, they're also able to put the squeeze in competition in the labor market. >> can i ask you to spend one minute on the final question, few minutes left, let's say you are the u.s. labor secretary and the president calls you up and says, what do we need to do to improve the labor market for middle-class workers? what's your quick, please take no longer than a print, what's your answer? let's just start with heidi and go to michael. >> all right. can i -- i'm going to first start and say if i didn't have to pick just one it would be a suite of things like we these to raise the minimum wage and overtime protections and paid sick days and fair scheduling laws and good enforcement of all of those things. i get that i can't do -- i have each of those would be their own initiative. i have to pick one. if i'm going to pick just one i would pick the thing that would be the most likely to sort of cover all of those things and that's boosting unionization. all of those things are things that people negotiate in a

collective bargaining agreement. it gives you bang for the buck in terms of creating a fairer economy. do the things we need to boost unionization like make sure that workers who want to join a union are able to do so free from retaliation and intimidation by their employer like through massively increasing penalties for unfair labor practices. make sure that workers who join a union are abole to get to a first contract if contract negotiations are breaking down. ban so-called right to work laws that are the things that mean that unions cannot be -- cannot require workers who get the benefits of union representation from paying from their fair share of that union representation. those set of things, those suite of things we could do to boost unionization, the biggest bang for the buck if i had to pick one. >> michael, 60 seconds. >> i assume congress isn't involved? >> you can assume whatever you

want. hypothetical exercise. >> congress tends to screw things up. if i had to pick one thing, i think it would be to look very seriously at significantly expanding earning subsidies for low-income households. i think given what we know about the effect of globalization and the effect of technological advancements over the last 20 or 30 years on the low-wage labor market and specifically on the wages that are offered and the low-wage labor market that a very effective solution to that challenge, given what we know about how previous expansions of those earnings subsidies have pulled millions of people into the work force, i think that would expect that would happen again and given that we know that every year millions and millions of people including several million children are lifted out of poverty, as a consequence of those subsidies making them bigger makes all the more sense. >> ben, one minute please. >> one minute. >> i associate myself with

everything that heidi said so i'm going to cheat too. >> me too maybe. >> i definitely [ inaudible ]. >> excellent. >> what i will say is that to expand and go even further down a line that heidi did, we should explore sectoral bargaining and wage boards so we're dealing with wages not just the very bottom with the minimum wage but also in the middle. if you take a look it's really hard for one -- for a firm to unionize when that firm is saying look i'm going to have to compete against this lower cost sort of low road firm over here and so you take a look at some other countries and how they have seen better histories with wages they have more sectoral wide bargaining. in new york with fast food workers with the fight for 15 and so i think that's a place to go. i think the other thing tied to sec torl bargaining is

apprenticeships and making sure we're promoting the kind of rigorous high quality apprenticeships that have led to $300,000 of earnings and benefits over the lifetime of workers historically but trying to massively expand them to sectors in which we don't see them today. building on what we've done in the building trades but getting them into tech and health care so that you have a greater investment by business in training while also leading to higher wages for workers. >> melissa, final word. >> sure. i'm going to push for like huge dedicated commitment to massive skill upgrading of noncollege educated americans. something on the order of what we did in the early 20th century when we made secondary education available for everybody. we need to make sure that individuals who have been dislocated, displaced, or don't have the skills demanded in today's economy have a productive opportunity to contribute and prosper, build on

things that were started with the previous administration and the department of labor. these guided pathways models that are being implemented around the country, community college, high school, private sector partnerships where we're taking kids, young individuals giving them guided pathways into the work force. community colleges, let's double down on that. millions of students go to community colleges. we need to make sure they're getting a return on the investment and the american taxpayer is getting a return on investment. lots of loans and funding for those schools for individuals. completion rates are low. students aren't sure what to study. enhance student supports and z advising can capitalize on that institution and i will combine it with active labor market policies. we're just way behind what european countries are doing in terms of active laib market policies. make sure we have vouchers for adults to get accredited directed training, let's expand

existing dol programs for moving vouchers for people to leave economically distressed areas and go in search of jobs. stop there. >> thank you. >> as everyone stays into your seats as we transition into the third and final segment of today's program, join me in thanking our outstanding package today. thank you. >> please join me in thanking ben harris for excellently moderating that discussion. as ben said, please remain in your seats as another scene change as we move from act two to act three. the next person unfortunately see at the podium will be general john allen, the president of the brooksings institution. he will introduce our keynot speaker, the former vice president joe biden and that will be happening imminently as soon as we've changed this. those of you here please remain in your seats. those of you at home might have a couple minutes to run to the rest room or grab a cup of

coffee. everyone else stay put.

>> thank you for that. i'm not the vice president, but i'll take the applause, nonetheless. good morning, ladies and gentlemen. it's wonderful to have you all with us here at brookings and let me add my greetings to those of you coming in over the internet. we have -- we are grateful for your being with us this morning and for joining us. it's a great pleasure tofor me welcome each of you to the keynote address closing this morning's event the future of the middle class. before i go on let me offer my sincere thanks to our co-hosts this morning, the biden foundation, mr. vice president, ben harris was really on point this morning in the panel that he ran. we are very pleased at the

brookings institution to partner with the biden foundation. speaking on behalf of the institution, we want to explore an even deeper relationship as we go forward securing the interests of the middle class which faces challenges we've never seen before, challenges that will be with us for many, many years to come and the panels we had this morning and the terrific panelists who joined us this morning, really helped to illuminate many of the challenges we face and the difficulties we'll have to overcome as we seek to protect and expand the middle class of the united states of america. now finding new and innovative ways to ensure the success of our middle class ranks among our top priorities at this institution and for that reason i would like to extend my special thanks to richard reeves for his phenomenal work here in spearheading this new future of the middle class snishtive and camille bissett, director of prosperity and inclusion

initiative as she works tirelessly to advance the equity and economic prospects of communities struggling to obtain their small piece of the american dream. it's been an honor to work alongside both of you. thaes much work to be done. we look forward to doing it together. now in a few moments i'll invite the vice president to join us on the stage, but i don't think that our vice president joe biden needs any introduction. for his 36 years as a senator from the great state of delaware to his unwavering leadership as our 47th vice president, we would be hard pressed to find another american who more completely embodies the ideals of this great nation. vice president biden is among the finest public servants i have ever known and a true champion of the american people and certainly the middle class. he's a father, a patriot, a husband, a true leader and to me

a dear friend. so please join me this morning in welcoming the former vice president of the united states, vice president joe biden. [ applause ] >> how are you? thank you. if i were smart i would leave right now. it's clear that john, the general, is not vice president. he had many -- too many stars to be just a mere vice president. and i feel mildly intimidated speaking before such a group of esteemed economists. it's a little bit like when i would go into the tank with the general and the chiefs of staff and give them my ideas on national security. but it tef stoppnever stopped mo

it's not going to stop me now. it's an honor to be here and i mean that sincerely. look, i want to start off by saying at the biden institute, we're delighted that brookings has taken up the mantle and they have all along to deal with the middle class. i know for years and years i look at alice and some other others here, i've been characterized in washington as middle class joe. in washington it was never meant as a compliment. it meant i wasn't that sophisticated. i'm pretty sophisticated about the middle class and about the history of nations who are unable to sustain a middle class and what happens to their prospects, short term and long term. i think we're at a very, very -- we're at what some might call an inflection point right now and the decisions we make i think in the next several years are going

to say an awful lot about what kind of life our children and grandchildren are going to be leading. and there's no reason why it shouldn't be brighter than the ones we've led. i want to thank you, brookings, again, for hosting the event. the future of the middle class is a critical new venture here at brookings and in many ways, the focus on the work being done both here and at the biden institute and the university of delaware with the biden foundation, the forum which ben -- ben you had a panel this morning you just finished chairing -- that ben oversees, the platform is to allow the most important voices in the nation to discuss the opportunities, plight and benefits of the middle class. we had alan krueger write a note on the rig -- what he called the rigged labor market, several posts on ways to make the middle

class more inclusive. last week peter hevine from tufts wrote as piece on how millennials no longer feel like they're part of the middle class and we've had others, some of you in this room, write note for us as well. and i encourage you to take a look at it. i think we made them available here. take a look at them. and they're from groups, left, right and center, we're not just trying to determine -- predetermine the outcome here. folks, we're here today for a simple reason, to talk about the middle class but i often get asked from the start, why is it worth talking about the middle class? why is there today so much being writ on it and focused on it? why the middle class in the first place? i think it's a fairly honest question to ask. from where i sit, i think the reason for our social and political stability in no small

part has been because we have had a strong, aspiring and growing middle class. i think it accounts for much of our stability over the last hundred years. americans are more connected when they share economic circumstance, when we know that the other man or woman is facing the struggles and has the same opportunities at success as we do. i think a strong middle class breeds opportunity. we're starting to see more of that, proof of that in studies, that opportunity in communities that allow for people to move up the economic ladder are the ones with the largest economic prosperity. look, you know, when the middle class does well, everybody does very, very well. the wooelealthy do very well ane poor have some light, a chance, they look at it like maybe me,

there may be a way. america today, you know, we're -- there's a lot of sort of cynicism out there. when the middle class does well, american companies rely on tens of millions of customers to be able to buy their products and they do very well. it feeds a virtuous cycle. i know you all know this, but since this is being taped i want to make sure everybody who doesn't see it understand it. you have forgotten more about this subject than many of us know. it is a self-sfulfilling prophey everyone wins. if with e have a weak middle cl we become a fractured country. i want to take you through the analysis being done over the last number of years by a number of folks including in of you in this room to demonstrate how democracies die and things change in a fundamental way when

opportunity seems to no longer be within reach. when opportunity fades, people feel left out. they either drop out or they fight for radical changes. that's what we're starting to see now. a younger generation that's questioning the very essence of our capitalist system, and it's the lack of hope, the lack of opportunity, that's driving so much of what's happening today. america is all about possibilities. i've spent more time with xi jinping than any world leader. i've had 25 hours of private dinners, just me and i and an interpreter because his predecessor and my boss thought we should get to know one another. i traveled 17,000 miles with him in china and 7,000 miles here. he's a bright guy and he is not unafraid to ask questions, some of the most revealing questions that i've ever had a world leader ask me. we're in a town that i think was only 6, 7, 8 million people, now

22 million, on the tibetan plateau and he turned to me in the middle of dinner and said can you define america for me. i said yes, i can can. in one word. possibilities. possibilities. that's why we're viewed by so many of you or you studying here from other countries as the ugly americans. we always thought anything is possible. anything is possible. that's the way you were all raised. anything is possible in america. and that seems to me the one defining feature that separates us from almost every other country. every generation believes that there's something better waiting for their kids in the next generation. when people start to think that their kids aren't going to do as well, things begin to erode. you realize 54% of the american people no longer think a college education is worth it. did you ever think you would

live to see that, no matter how young you are? we're in a situation where you have a majority of people who don't view themselves as being in the middle class. people stop believing in the american dream, they stop believing in the impossible, the nature of this country in my -- i can't prove this from an economic terms but i believe with every fiber in my being it changes the nature of who we are. when that dream lives, anything is possible. whether it means digging out of tough times or getting stronger in good times. but it's all built on the premise that our kids are going to do better than we are going to do. than we're doing. and you know a lot of this hope and optimism was based on a basic bargain that democrats and republicans subscribe to, at least since the new deal, and that was if you were part of an enterprise, you contributed to

that enterprise, that was successful, you got to share in the profits. you got to share in the success. but that is not true anymore. factually that is not true anymore. the bargain has been broken. a lot of you have argued it's been broken for different reasons and you're all right in my view probably. the reason i say that is, there's many reasons why it's been broken. it's not merely globalization, digitalization, artificial intelligence. it's the tax code, the range of other things out there, decisions we made or failed to make as the world economy is changing because we are going through a fourth industrial revolution. like every single revolution we've gone through economically from back in the days of rome and england smashing the machinery, it's upset the social structure. and it's taken somewhere between a decade to five decades for

governments to catch up. a gap between productivity and income has never been greater. workers are delivering more and they're getting a lot less. i won't give you the statistics which are in my speech but you know the numbers. productivity matched wage increases up until about '75 or '76 then it all began to shift. there's no correlation now between productivity and wages. folks in the middle class are in trouble. it's not just their perception. they are in trouble. now it's all about taking care of the folks at the top. as about -- do any of you remember the day we decided that the only people who were job creators were stock holders? raise your hand. when the hell did that happen. i mean, deadly [ inaudible ].

i have a cartoon, mike seen it in my office a guy dressed in a -- it's a bandit dressed in a black turtleneck sweater or big rotund guy in new york, you may have seen it, and he has a black mask and he's being interrogated. a bag of money on the table. he looks at the interrogator and says, how was i supposed to know he was a job creator. but i'm being serious. when did this all change? it's been subtle, but it's changed. so, i won't give you the statistics, you know them, over the last five years, actually, longer since 2012, the stock buybacks of companies, tell me, the increased productivity that's come from that. tell me, show me some data.

it's all about taking care of the shareholder. and they're good folks, man. couldn't do it without a shareholder, without them investing. but it's very little gone into the pocket of workers and less into investment and things like research, development and worker training. when i was doing the recovery act for the president, i kept wondering, we're spending all this time and money to figure out how to invest in research and development. it dawned on me, why aren't companies doing any of it? well, there's some reasons why they're not doing anything. no product to be sold. no customer for a while. but then when you look at it further, what in the hell is going on. look, all that can be argued in a macro economic level globalization, automation and technological changes they've been successful but left a lot of people behind. a lot of people are fearing the future now. a lot of people who are

uncertain about whether they can maintain their quality of life. my staff told me not to do this but i'll give you an anecdote. i was home -- this is in case anybody is watching this on television, because you all understand it, but it's hard to translate sometimes -- i was home with a guy i grew up with in delaware, little steel town, went to the same catholic grade school together and he went on to the public school and i went on to a catholic high school and he didn't go to college and he's a good guy and i've seen him and anyway, for a while, i saw him at christmastime, he walked up to me and he goes, joey, grabs my cheek, and secret service nearly shot him, but he said -- i said what you doing? he was an independent trucker. i said you still driving? no, joey, only guys like you that never worked in your life can continue to work. and he laughed. he said, no, i retired, joey. i said how is your son doing? trucker too.

he said doing okay now, joey, but he knows he's in trouble. he knows he's in trouble. i said how is that? can i help? can i help? looks at me and says, no, joey, there's going to be no truck drivers in five years over the road. whether your predictions are true about automation and self-driving trucks, these folks aren't stupid. they listen. they understand. and they're scared to death. they're scared to death. this is a man who busted his rear end for a long, long time. but i really mean it. it breaks my heart. he's worried. can i keep it. can i take care of the grandkids. folks, look, take that guy working on the assembly making 51 grand, we don't talk about him anymore, by the way, if you notice politically, not you, we

in politics don't, and his wife is a hostess at a nice restaurant making 28. so, they're making almost 80 grand. they got two or three kids. and they can't make it. they live in washington or new york or san francisco. i don't have to ask any woman in here who has children, how much do you pay in day care if this town for two kids. $22,000 a year. when is the last time -- raise your hand if you have any kids or grandkids in college. i tell you what, i had a good salary, it paid me a lot of money as -- in relative terms where i come from as a u.s. senator. i had three successful children. they went to great schools. they worked 30 hours a week both boys, one went to georgetown and then to yale law school, the other went to penn and then syracuse law school out of

loyalty. and my daughter went to tulane and then graduate school at penn and graduated honors. i borrowed everything i possibly could, the value of my house going up, them working 30 hours a week during school, one parking cars at georgetown valet, the other one working at an electric company in philadelphia, they graduated $141,000 in debt, $121,000 in debt, and $103,000 in debt. they're paying it off, paid it off. you wonder why people say 54% of the american people think college is not worth it for their kids. go back to the state university you graduated from. figure how you make it. does anybody talk about these people anymore? did you hear any of it in the

last campaign? folks, when you got two kids, a mortgage payment, car payment, basically no retirement savings, you can't make it. the problem isn't just that -- it's not just salaries. i said, it's a soaring cost of education, the cost of child care. it's mortgages. empty retirement accounts. and no pension for a significant number of them. they're afraid they're going to have to look to their kids instead of helping their kids, look to their kids for help. an economist that works with me, i think i drive them crazy when i say, middle class is not a number. you guys and women can give me a number, $51,215 or 52,000 -- it's a value set. it's a value set. it's about being able to own your home and not have to rent

it. being able to send your kid to a park and they're going to come home safely. it's about being able to send your kid to a public school that if they do well, enough, they can go on after high school and if they qualify to go on after high school you can figure out how to pay for it. you can take care of your geriatric mom after your dad passed away and you hope your kids will never have to take care of you. that's not a joe biden-ism. that's a reality. that's the people i grew up with. that's what people thought for the last three generations. but now, it's looking further and further down the road. i don't know anyone of the guys i grew up with who worked at general motors who didn't -- who aspired to be a renter. i don't know any. but look, it's not just paying the bills that worries these folks. my dad used to have an

expression. my dad, we moved from scranton, pennsylvania, my dad, if you listen to barack you think i climbed out of a coal mine with a lunch bucket from scranton. but it's not true. my dad was a white collar worker, a salesperson, and when coal died, everything died in scranton and there was nobody to sell anything to. so we moved down to a place more prosperous, southeastern pennsylvania and northern delaware. and after that, every time anyone in our neighborhood would lose a job, whether it was a recession or a setback, my dad used to say, joey, he would say it to all the kids, remember, a job is about a lot more than a paycheck. a job is about your dignity, it's about your place in the community, it's about being able to look your kid in the eye and say honey, it's going to be okay. that's what a job is about. i was asked a keynote, some of you may have been there, last

august, i'm not sure it was august, in the fall, the -- what's it called the fest that google has in arizona, and they had a great idea. they're socially conscious. they're talking about a guaranteed annual wage because of what's going to happen as a conquensh of the fourth industrial revolution. i said, that's not going to work. it may be necessary to help people through, but think about it. what do you value most? you value being looked at by other people in society as being worthy. it really matters. far too many people today can't look at their kids in the eye and say i know it's going to be okay. these aren't all poor folk. so here's what we have to change in my view. i think they're answers.

one, first, i think what we have to do, deal with income inequity. i love bernie but i'm not bernie sanders. i don't think 500 billionaires are the reason why we're in trouble. i hope my grand kids grow up to be don't listen to their parents who all decided to do something, run the world food program, another be attorney general, another one run a social organization for at risk youth, you know. you got all this education. they -- you know, i should have had a republican kid. so when they put me in a home i would have a window with a view, you know what i mean. now there's going to be no view. but all kidding aside, there is -- we have not seen this huge concentration of wealth. folks at the top aren't bad guys. i get in trouble in my party when i say wealthy americans are

just as patriotic as poor folks. i found no distinction. i haven't. but this gap is yawning, it's gaping, it's having the effect of pulling us apart. you see the politics of it. and the country is not going to stand for it forever. we have to deal with the tax code. it's wildly skewed toward taking care of those at the very top. it favors overwhelmingly favors investors over workers. it's riddled with unproductive expenditures. my economics teacher at the university of delaware taught me the reason for a tax expenditure is to promote a social good, generate people taking risk, increased productivity. raise your hand if you think that 1 trillion 300 billion plus dollars in tax expenditures, whether even half of it meets

that -- two-thirds of it meets that criteria. as they say where i come from, get a life. look what's happened. the latest tax cut. once again, those at the very top get the biggest breaks. and what we -- what do we have to show for it? even our republican friends are now beginning to admit there's no evidence these tax cuts are being put to work in the economy. no new growth. just more debt. and that puts the middle class programs that they rely on and worked for at real risk. paul ryan was correct when he did the tax code the first thing he decided we have to go after. social security. and medicare. now, we need to do something about social security and medicare. that's the only way you can find room to pay for it. i don't know a whole lot of people in the top one tenth of

1% or the top 1% relying on social security when they retire. i don't know a lot of them. maybe you guys do. so we need a pro-growth progressive tax code that treats workers as job creators, not just investors. that gets rid of unprotected loop holes like stepped up bases and raises enough revenue to make sure the social security and medicare can stay, still needs adjustments, but can stay. and pay for the things we all acknowledge will grow the country. second, we've got to educate our people. my wife who is teaching as i speak, she has her dock rate, two masters degree and dock rate, teaches at a community college, she has an expression and says, any country that out educates us, will out compete

us. that's why in 2014 -- the thing the president loved most about the state of the union addresses is turn and say, and joe is going to. you think i'm kidding. he never told me what he wanted me to do. he thought that was funny. you may remember in 2014, joe is going to do a year-long study on jobs in the future. so i traveled the country meeting with major ceos between penny and i, we interviewed over 340 ceos of the top corporations met with all kinds of business people, and the overwhelming message we received from the business community is the same one you received, we need a better educated work force. surprise surprise surprise. we found that by the end of this decade, six in ten jobs will need some training, some education, beyond high school. but you're not going to make it.

digitalization, automation, artificial intelligence, these changes are coming so fast you can't commit yourself to anything other than life-long learning. i just did harvard's commencement and pointed out if you graduate with a ph.d. in astro physics if you don't go back for education you will be obsolete in ten years. that's a fact. quite simply, 12 years of education is no longer sufficient. do any one of you think if we were starting from scratch like we did back at the turn of the 20th century, being the first nation, major nation in the world, to have universal, nonmeans tested 12 years of education we would have stopped at 12 years if we're doing it today. raise your hand if anybody thinks 12 years is enough in the 21st century. we know it's not. so we need widespread access to affordable education. college. community college.

they should be free in my view. there goes that big spending biden again, man. we can put every single solitary kid who qualifies, kid, person, my wife's average age of her students is 29, we could put every single qualified student in community college in college raising the number from 6 to 9 million, increasing the gdp by 0.2% a year, and we can do it for $6 billion. how in god's name are we going to pay for that? if i eliminate stepped up bases, just that, out of a trillion 300 plus billion in tax loopholes, tax expenditures, that's only $17 billion. $17 billion. no evidence that it produces any growth initiatives. it's not an inheritance tax.

i didn't know what stepped up bases was because you may remember when i file my financial disclosure as vice president the front page of "the washington post" said it's probable no man has ever assumed the office of vice president with fewer assets than joe biden. my net worth was between 50 and $155,000 when i left after 44 years, it was still between 50 and $155,000 because i said i would never own a stock or bond for fear of conflict, i would never engage in a business enterprise, even those that were legal and appropriate, and i would never accept an honorarien. i got the dubious distinction. i also had absolute independence my whole career. but here's the point. you go out -- you know what stepped up base is. you go out and make a profit, you're about to go and pay a capital gains, you're heading to your broker to sell it, now you do it on-line, hit by a truck,

it gets left to your son or daughter. the capital gains you're going to pay six minutes earlier no longer has to be paid. no evidence that that generates greater growth. it's not an inheritance tax. it was due ten minutes earlier. eliminate that and put every single kid in community college for free. cutting in half, cutting in half the cost of a four-year education. increasing productivity. what the hell are we doing? i believe every state university should be free. we can afford it. it's closer to $40 billion. but we can afford it. out of that 1 trillion 348 billion. look, we need to make a life-long learning commonplace. from the ph.d. to the factory

worker. education is part of every worker's livelihood. it is necessary as the world continues to change so rapidly. did you guys stop learning, those of you with ph.d.s in here and your doctorate. your examples of power of continuing to learn and work and learn more. the third thing we've got to do is empower workers. workers have no leverage anymore. and again, this wasn't a plot. this isn't a right wing plot to go on -- although the chamber of commerce did declare on labor's house a while ago and labor has its own problems, organize labor. labor has to deal with some changes as well. but just take a look at how the deck has been stacked. and i didn't even realize this until a couple years ago. look at the study. used to think that wage stagnation was only driven by globalization and automation.

it is in part driven by that. but now we lack -- there's lack of competition and that matters too. bargaining power for workers. all the power is with the employers and the companies. and they're squeezing the life out of workers because workers have no bargaining power. so, we need a more competitive labor market that protects workers as well. you know, 40% of all the workers in the united states will, during their careers, have to sign a noncompete clause. sandwich makers. not a joke. not a joke. sandwich makers. one example, a guy driving the old truck who fills up the -- on the construction site for highway crews in texas, he signed a noncompete in order to be able to do that. in order to go to another company you have to travel at least 345 miles to be able to

qualify to compete for another job. 25% of workers it's a violation of their work contract if they discuss with a coworker what they make. 25% of all workers if they discuss with a co-worker what they make. over 4 million workers who because of false classification, making them managers, hourly wages, it cost them $1.2 trillion in lost wages every year -- did i say trillion, billion dollars. now guys, tell me, give me an economic reason why a sandwich maker has to sign a noncompete clause. tell me, other than driving down

and keep down wages. you are not allowed to tell the man or woman you work next to what you make without violating a contract. i call it greed. give me an economic justification for that. we need to get rid of these abusive noncompete clauses. let workers know what their fellow employees are being paid. provide fair pay for people who work overtime. what economic rationale is there for any of those three things? you all remain silent. the country remains silent. you wonder why people think their place is rigged. we've got to rebuild this nation's infrastructure. you know, there have been 45

speeches in the last year on this platform about that. the infrastructure is falling apart, ranked 29th in the world at transportation infrastructure. the united states of america. some of you may remember i got in trouble as the vice president when i landed in laguardia and i said, this is a third-world airport. there was actual signs saying an escalator, it was in march, said it will be fixed by the first of the year. the united states of america. the united states of america. and the most -- best city in the world, it will be fixed by the end of the year. i got in a lot of trouble when i compared it to -- i said if you were asleep and you woke up in a beijing airport and woke up in laguardia and they asked you which one is the third-world airport everybody knew it. two weeks later i had to land in laguardia, to do an event for

the day, landed, and the air force 2 pilots were joking with me and said, mr. vice president, is it safe to land. i said i can't guarantee it but you don't have any of those little rockets hidden anywhere under here, do you. joking. so i went and did my event and came back. a lot of you have been on air force one and two, well some of you, because you've been involved in other administrations, and so i get out of the limo, they pull up, and there's six people standing by the gangway like this. but they all have brown suits on with -- with the fluorescent orange belt around them. turns out, it is the guys, the union women and men who run the airport. and i walked up and i figured okay, here we go. and first thing, and the guy introduced himself and said my name is charlie smith, i just came to say thanks. he grabbed ply hand and hugged me. he said you're dead right.

what happened? cuomo the mayor got upset but said no, i think we need to do something and then the governor and state legislature and then they invest $6 billion and modernizing the airports now. how the hell do we compete, guys? if i can get your product out in a port in hong kong three times faster than i can out of los angeles, where the hell are you going to go build your factory? does anybody know anywhere in america where there's investments being made that you don't want to know where the rail head is, where the highway is, how you get access, what the water availability is, et cetera. look, we need roads, we need waterways, ports to move our products, highways and transit to get workers to and from work. we need lightning fast broadband to communicate. it's not a luxury.

it's an absolute necessity. to compete with the rest of the world. we need a massive investment in infrastructure, road, wing, airports, broadband, lagging behind for many years now and we can afford it. again, again, if you decide to leave -- i won't go into the tax code again. fifth, i think we've got to get every part of this nation into the game. i spoke out at a kellogg school a couple -- about a month ago, i guess it was, or two months ago, and pointed out that innovation and entrepreneurship are at the heart of the american economy which everybody knows and it's always been that way and it's how we got to the top and able to stay at the top so long. but so many americans are being left out. 75% of all venture capital goes to four cities in the united states of america, 75% of all venture capital goes to four cities in the united states of america.

think of the great ideas that never get funding because entrepreneurs live in the wrong city. you can't have zip codes determining the future of the nation in my view. so we need policies that get investment capital to every state in in the nation. during the recession, president obama and i added parts to the recovery act that got small business funding to innovators in forgotten towns and communities and counties. and we need to make that permanent. one idea is the race to the top that gives federal dollars to states that are willing to make their economies friendlier to investors. folks, i've thought about what's happened to the middle class in america and why so much frustration has grown and why so many americans have felt left out, why so many americans feel displaced and why there's been such a fertile ground for this phony populism that we're living through now, and it is a phony populism as my friend john mccain would say. it's all about making room for

the abuse of power. it's being able to point out that the reason you have a problem is the other, the other is the reason you're not doing well. it's a tactic used by every -- well, i won't characterize it. throughout the last century. but look, i see a greater and greater concentration of wealth. you guys write about it. you women write about it. more and more tax benefits going to fewer and fewer people. the rise of monopolies weaken labor. one obstacle after another thrown in labor's way. too much money, too much money being spent in this country on our political system. what do you think? do you think any middle class guy out there thinks if i have a pac, unlimited that anybody can put anything in for me, a super pac, do you think i really have their interests?

what do you think? well, i was thinking of running before. i had $44 million committed to me, another 22 if i'd run. we decided we couldn't possibly accept it. not because they were bad people offering the money, but i'm out there talking about the middle class, and i got four people contributing over $50 million to my campaign. what do you think, guys? what do you think? ask yourself. why are we giving -- still giving hedge fund billionaires tax breaks, but we can't find any room -- money to give tax breaks for childcare? why do you think? even though the stiudies show i you gave up to $6,000 in childcare tax cuts, we'd get about -- i think it's 700,000 more women back in the labor market, increasing productivity. why do you think we can't do

that, huh? why is a sandwich maker being forced to sign a noncompete clause? how's that happen? why are low-wage workers reclassified as managers? what possible reason is there where any employee can't tell another employee what they make? is there any other reason than to depress wages? while we're at it, as i said, how do we wake up one day and stop looking at people like my dad who ran an automobile dealership, didn't own it, as a job creator. sold a hell of a lot of cars, put a lot of people to work. since when he didn't create jobs and the millions of people like him. i applaud investors. but do i think they are greater job creators than anyone else who work in that company? no, i don't.

how did we get from $800 billion in tax expenditures in the last year of ronald reagan to over $1.3 trillion today? as my mother would say, who died and left you boss? how'd that happen? what's the rationale behind that? show me the benefit. and still argue that protecting things like stepped up bases mak makes more sense than putting 3 million more kids through community college. does anyone believe in this room that there isn't significant room for savings and tax expenditures to pay for health care, for education, rebuilding the nation? look at the fundamental choices. unproductive tax expenditures. what choice are we going to

make? i think in large part because of the supreme court decision on funding, we know a choice being made. folks, one more thing. how do we get to a place where the people who repair our bridges and our roofs and keep the sewers open in the middle of storms and keep our city water system work, have the traffic lights function, teach our kids, take care of the sick. how did we get to the place where they don't feel respected anymore? what happened there? you know, you don't need this, but i'd recommend it if you haven't read it. i'd recommend it. and i took the first nine pages, and i had my staff put it on, type it out for me, and i sent it to my sister to say, what'd you think? because she runs this foundation

for me, implying that i wrote it. she said, it sounds just like you. well, the only part in the beginning sounds just like me. it's not class consciousness. it's class cluelessness. class cluelessness. and it's understandable. what's the value we value now and we should? it's been a great equalizer, cognitive capability. cognitive capability. so we have more -- i can tell you -- i'll bet you i could pick what -- i never lived in washington other than as vice president, but i can tell you where every rhode scholar and marshall scholar lives in. they're black, they're white, they're gay, they're straight, they're asian. it's completely merit based, but no one's talking about home. no one's talking about the

neighborhoods they grew up in. i mean it sincerely. i'll end with another anecdote. my wife is chairman of save the children usa. and she was going down to puerto rico to thank her workers, their workers, for the efforts being made over the last year. i had to go down -- didn't have to. i was going down to florida for a different reason. i was going down to campaign for some democrats and to make a speech at the university of miami. and i was asked by a friend would i go to st. croix because there's been a lot of damage that's been done in terms of the -- mostly the power lines coming down, electricity, the poles down. i said sure i would. so i flew for a day, and we're going to the island. if you know st. croix, it was

industrialized. it had a big oil refinery there. it's now shut down. it's the least touristy island of the virgins. they were on the east end of the island, pulled into a gas station, like a mom and pop grocery store attached to it, like a 1960s 7-eleven hero something. you see all the trucks from all over the country putting the poles back up. i get out of the car, get the ka gas, went in to pay. i walk over to the guy in the bucket, and there's seven guys around him all hard hats on. i yelled up, i said, hey, man, i said, thanks. i was being serious. i said, thanks, thanks for what you're doing. you're keeping the lights on the in the hospital, you're helping a lot of people. and i will not exactly quote what he said. he said, hey, man, you screwing with me? try t it, by the way. you think i'm kidding. next time you see a sanitation

worker, thank him and watch the look on his face. watch the look on his or her face. and i said, no, man. he lowers the bucket. he said, you kidding, mon? i said, no. he said, no one's ever thanked me before. thank you, man. thank you, man. thank you. not a joke. if i walk by the sanitation worker and said hello to the ceo, my father would kick my butt. you're supposed to say hello to both of them. but not a joke. these people don't think we care a whole lot about them. and you can't function if they can't keep these sewers open. you can't function if you don't have someone programming the lights, the traffic lights. so folks, look, one more thing. how'd we get to a place where

people who, like the people who allow us to every single day have all the amenities we have sort of become, you know, something else out there. i think we make the right decisions, we'll not only revitalize the middle class but build a much more inclusive middle class. it has to be more inclusive and bring everyone along. women, black men, hispanics. there's room to do this. it's not rocket science. it's not rocket science. it's a commitment of the head and the heart, to be able to get this done. it's totally within our capacity to do these things. you know, i'll conclude by saying that notwithstanding my frustration, i'm more -- you know, every time you read about me when i was vice president with the president, i'd be

referred to as biden, the white house optimist. like i fell off the turnip truck yesterday. i've been there longer than all of them. i'm optimistic because i know the american people. i know the journey of this country. never, ever, ever given a shot have the american people ever let the country down. never, never, never. ordinary people -- ordinary people do extraordinary things. we become awful elitist. we don't think ordinary people can do things like program, code. it's not rocket science, guys. we did it up in michigan when detroit found out they didn't have -- all the exodus. when the city got back on its feet, people who could turn on

the street lights, run the water system. so we hired some folks to go into the neighborhoods. they picked 58 women, turns out, from the hood for 17-week program, if my memory serves me correctly, to learn how to code. not one had more than a high school degree. a third only had geds. at the end of the training, every one of them had a job. the average salary was over $50,000 a year. they learned to code. it's not a secret. not joking. the same guy who can throw coal into a blast furnace can learn how to run a machine on the floor of a factory. so guys, anything is still possible. we are in a better position than any nation in the world. we have more great research universities in this country than every other country in the world combined.

eisenhower was pretty damn smart. that's the reason for all the initiative that's coming out of this country. name me some life-changing product that's been found in another country that has china stamped on it or any other country stamped on it. we have constant, constant source of employment because of immigration policies. we find ourselves in a position where our workers are three times as productive as workers in china and in asia. we have the most agile venture capitalists in the world. this is america, man. sounds corny, but we got to pick our heads up, look at who the hell we are, begin to walk again for god's sake, instead of walking around like, woe is me.

i've met every single major world leader in the last 44 years. just the nature of my job. i don't know a single one who wouldn't trade places with america's problems in a heartbeat. so what the hell are we doing? except counting on all of you to wake us all up. more than you ever asked for, but that's how i feel about it. thank you. [ applause ] >> thank you, ladies and gentlemen. if you could just remain in your seats for a couple of moments while the vice president exits the building. in what i'll now call the biden spirit, i'd like to thank not only our panelists, the speaker, but all the av staff who helped put this event together, the catering staff that provided the food for us, our own facility staff who have kept us comfortable and safe through

this event, as well as the event staff and under the leadership of robert moss, our own security staff who have worked very hard to make today possible. so all the people who perhaps don't instinctively thank, i'm not doing so, perhaps i wouldn't have done so if the vice president hadn't given me that inspiration. but i mean it nonetheless. we don't do it often enough. thank you to all of you who came physically, thank you to those still watching online. please continue to stay with us. the future of the middle class initiative is live as of today. we'll continue to tweet using that hashtag. we've opened an e-mail address. economicstudies@brookings.edu. e-mail us your responses to today's event, did you agree with janet, did you agree can camille, et cetera. you don't have to be that personal, if you don't like. please continue to feed into our work as we go forward. again, thank you very much for coming. you have one minute. okay, fine. just remain in your seats for another moment, i've been asked

to say that. but thank you all again for coming. coming up later today, homeland security secretary kirstjen nielsen will testify before a senate appropriations subcommittee on her department's 2019 budget request. we'll have live coverage at 2:30 p.m. eastern here on c-span3. and then tomorrow, the confirmation hearing for gina haspel, president trump's pick to be the next director of the cia. she'll testify before the senate intelligence committee at 9:30 a.m. eastern. we'll have that live also here on c-span3.

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